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December 9, 2016
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August 24, 2001
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June 20, 1973
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S 11568 Li S Approved For Release 2001/08/30 : CIA-RDP75600380R000600170055-2 CONGRESSIONAL RECORD ?SENATE June 20, 1[178 By Mr. BELLMON: S. 2043. A bill to amend the Consolidated Farm and Rural Development Act. Referred to the Committee on Agriculture and For- estry. By Mr. HARTKE: S. 2044. A bill to extend until September 30, 1975, the suspension of duty on certain dye- ing and tanning products and to include log- wood among such products. Referred to the Committee on Finance. By Mr. PERCY: S. 2045. An original bill to require that future appointments to the offices of Director and Deputy Director-of the Office of Manage- ment and Budget, and of certain other offi- cers in the Executive Office of the President, be subject to confirmation by the Senate. Placed on the calendar. STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS By Mr. RIBICOFF (for, himself, Mr. HARTKE, Mr. CHURCH, Mr. MONDALE, Mr. KENNEDY, Mr. PASTORE, Mr. HUMPHREY, Mr. NELSON, and Mr. FELL): S. 2025. A bill to amend title II of the Social Security Act and the Internal Revenue Code of 1954 to establish 1974 (rather than 1975) as the first year in which adjustments in benefits, wage base, and earnings limitation, can be made on account of increases in the cost of living. Referred to the Committee on Finance, SOCIAL SECURITY BENEFITS ESCALATION Mr. RIBICOFF. Mr. President, today I am introducing legislation to assure all - social security beneficiaries of an in- crease in retirement benefits as of Janu- tia,ry 1, 1974. Under present law social security benefits are not scheduled to in- crease until January 1, 1975. In the past few years Congress has substantially raised the social security benefit levels. But the cost of living has nullified much of these increases. Prop- erty taxes have jumped by nearly 39 percent in the last 4 years, nearly twice the overall increase in the Consumer Price Index. And the impact has been especially severe for the aged because nearly 70 percent own their own homes. Public transportation costs have risen by over 33 percent during this same period. Here again, senior citizens are hard hit since many must rely on pub- lic transit instead of private automobiles Food prices have gone up by at least 34 percent in the 4-year period. This is tragic for the elderly who spend 27 per- cent of their income for food as compared to 17 percent of all Americans. And medical care costs?a significant 'cost factor to the aged?have increased 36 percent. And all of these price increases have been escalating even more rapidly in the last few months. It would be one thing if social security benefits were at an adequate level. But they are not. Social security benefits for millions of older Americans?even with the 20-percent Increase enacted last year?still fall below the Government's own poverty benchmark. Average annual payments for retired workers amounted to $1,944 in 1972, nearly $40 below the poverty threshold for single aged per- sons. For widows, average benefits were more than $320 under the impoverished standard. It is unconscionable for us to let prices skyrocket out of sight while millions of older Americans are denied an increase in social security benefits. The legislation I am proposing would change the effective date of the so-called cost-of-living escalator in the social - security law from January 1, 1975 to January 1, 1974. This escalator provides that when the Consumer Price Index goes up by at least 3 percent in any year, social security benefits will be raised to keep pace with the inflation. In view of the 7-percent inflation to date this year I hope that Congress will take speedy action on this proposal. By Mr. HUMPHREY (for himself and Mr. AIKEN) : S. 2026. A bill to amend the Foreign Assistance Act of 1961, and for other purposes. Referred to the Committee on Foreign Relations. MUTUAL DEVELOPMENT AND COOPERATION ACT or 1973 MR. HUMPHREY. Mr. President, I have been distressed to observe the de- cline in U.S. support for the development of the low-income countries. Part of the reason for our poor performance stems from a disagreement over how aid should be administered. Many people have expressed a strong preference for multilateral aid over bi- lateral aid. I share that view. But some of the things America has to offer others are best carried in a bi- lateral form. For example, the great tra- dition and experience of rural cooper- atives ought to be brought to the atten- tion of the developing countries, and this is not likely to happen except through a bilateral program. The same is true of our private voluntary programs and our great universities and land grant col- lege's which have so much to offer the world. And, in any event, it Would not do to cut off bilateral aid until multilateral efforts are ready to take over the job. The world can ill afford to let its total support for the poor and the powerless of the earth decline. And that is exactly what will happen if American bilateral aid and its support of multilateral aid continues to lag. In the negotiations for the replenish- ment of the funds of the International Development Association, the soft loan window of the World Bank, I am un- happy to learn that it is America that is dragging its feet. I know that we have serious problems at home. Nobody is more mindful than I of the ills that beset us or more anxious to heal them. Yet, with all our problems, we are a very privileged people. Even our determined attacks on our problems reveal our basic strength. It is not like America, even under great stress, to forget other people in much greater need. This is not in keeping with the splendid traditions of this great Nation. Americans are generous people. They are citizens of the world as well as citi- zens of the United States. Since they are not directly represented on any of the in- ternational bodies as individuals, it is up to their Government to represent them in their keenly felt role as Iriorld citizens. I believe that we are failing to represent our citizens in role when we permit this richest of all the world's nations to become the laggard in the world's devel- opment effort. We can do much better. Not only for humanitarian reasons. But the peace and political stability we seek can only come about when the poor are brought into the development process. It was with a sense of genuine reas- surance, therefore, that d- learned of the vigorous new initiative of a bipartisan majority of the House Foreign Affairs Committee on American foreign eco- nomic aid legislation. Nowhere have I seen a more apt summary of that impor- tant initiative than in an editorial last Thursday, June 7, in the Minneapolis Tribune from which I would like to quote ohe paragraph: One has to be impressed as much by the ingenuity as the substance of a foreign aid proposal offered last week by a bipartisan majority of the House Foreign Affairs Com- mittee. Consider this unlikely combination of elements: The bill should appeal to development idealists. It offers new markets to profit-minded American exporters. It has the potential of increasing 'U.S. employ- ment. It would not increase taxes, and it is politically shrewd in other ways as well. Mr. President, I believe so strongly that we are in need of such new departures in foreign aid that I am today, on behalf of Senator AIKEN and myself, introduc- ing a bill identical to the House com- mittee version to amend the foreign aid legislation, - In joining with me in this effort, my good friend and distinguished colleague, GEORGE AIKEN, brings to this effort a deep sense of commitment to the principle that American aid should reach those most in need. In past years, I worked closely with Senator AIKEN in the development of legislation dealing with foreign economic assistance. During our joint efforts, I was always impressed with Senator AIKEN'S knowledge of the ingredients needed to make the development process become more effective. His cosponsorship of the Mutual Development and Cooper- ation Act of 1973 is symbolic of continu- ing bipartisan efforts to make American assistance responsive to the real needs of the world's poor. I believe this bill will do much to get America back on a true course in our relations with the developing countries. For too long U.S. foreign policy has been preoccupied with great power re- lationships. If a nation has a nuclear capability, or if it belong to the central trading establishment of the world, we have a place for it. But our policy today has little room Approved For Release 2001/08/30 : CIA-RDP75600380R000600170055-2 June 20, 1973 Approved For Release 2001/08/30: CIA-RDP75600380R000600170055-2 CONGRESSIONAL RECORD ? SENATE S 1150 for those nations where most of human- ity lives. I submit that such a policy is not only bad morality, it is bad security, bad economics, and bad diplomacy as well. The world is shrinking and econ- omies and societies are growing more interdependent. We have got to make this world work, and it will not work for the most fortunate unless it works rea- sonably well for the forgotten majority. We have no choice but to meet this challenge. We cannot forget the world's majority which is powerless today, but can vitally affect our future and our children's future tomorrow. Our foreign policy will not be whole, nor will it be viable until it is a policy which takes ac- count of the developing nations and works to make the bounties of the earth available to them az well as to ourselves. The bill we are introducing today is by no means all idealism, though it is idealistic. It is practical and tough- minded, and it serves the highest na- tional interest--L-our interest in making this world more livable for all of us and our children. First, this bill recognizes a veritable Intellectual revolt among scholars of de- velopment who are turning against the long-held view that growth alone is the answer that will trickle benefits down to the poorest majority. These scholars, and now this bill, start from the proposi- tion that the poorest majority must share in the work of building a nation and must share more equitably in the fruits of development at the outset? not at some future date after, growth targets have been Met. Greater equity and greater participation, instead of taking a toll on growth, supports and reinforces it. ? Years ago, the Congress took an initia- tive in passing title IX of the Foreign As- sistance Act, which expressed an earlier version of these views. The evidence of scholarly study and of experience now bears out the wisdom of that congres- sional view, and today it reappears in more mature and tangible form in this bill. It is more tangible because this bill specifies the fields of endeavor which will most directly benefit the poorest major- ity and commits money to each of those sectors. And each field is responsive to a deeply rooted human problem that per- meates the societies of the low-income countries. The three fields of emphasis are first, food, nutrition, and rural de- velopment, second, population planning and health, third, education and human resource development. ? Increasingly, the AID program has given sustained attention over a period of time to a problem in one of these three fields. And there are some stirring suc- cess stories to tell as a result. One story is about malaria. Twenty years ago, well over 10 million people in South Asia alone were afflicted with the' disease. More than 1 million died each year. Today the disease is under control. Another success story is about cereal production in South Asia. Seven years ago India imported 10 million tons of grain following a monsoon failure to. avoid widespread famine. During the en- suing years, she was able to accumulate nearly 10 million tons' of grain reserves from the expanded production made pos- sible by the green revolution in which American aid programs, public and pri- vate, played such an important role. Thus, when the Bangladesh crisis arose, India was the principal food do- nor, providing nearly 2 million tons of food. Even with this unprecedented gen- erosity, India has come very close to surviving this year's drought, one of the wQrst in a .century, by using its food re- serves. + A third story is -about population. A decade ado, populations were exploding throughout the poor lands and nobody was doing anything about it, and govern- ments did not even dare to speak- of it very openly. Today, although the prob- lem is far from solved, it is out in the open and governments?almost all of them?have population stabilization as an official or semiofficial goal, and they are mounting campaigns to solve popu- lation problems. That is real progress in one short decade on such a basic and sensitive problem. These three success stories not only refute some of the recent allegations by ill-informed authors to the effect that we do not know how to help in the de- velopment process; they also illustrate the worth of the problem-solving ap- proach to development. That is the ap- proach where we concentrate enough resources over enough time on an acute human problem affecting the poorest majority to get some results. That is the first very basic reform built into this bill. This new approach to foreign aid will enable the little guy to be reached? millions of lower income families will be affected. The, second reform introduced by this bill, grows out of an interesting piece of research done by our House colleagues. That reseach shows that the United States is doing very well in increasing its exports to the developing countries as a whole. In fact, these countries have become very important customers, im- porting about as much as the Common Market?including the United King- dom?plus Japan. It is a critical and growing market whose importance is not often appre- ciated However, the House committee looked deeper and found that in the poorest countries?those with per capita GNP of $200 per year or less?U.S. ex- ports are not doing well at all. Not only are we losing our share of this market to other exporters, we are losing in absolute dollar volume of sales. Amer- ican exports to these markets are de- pendent on U.S. Government financing, mostly AID and Public Law 480. The Export-Import Bank and private loans are not very large. This is not surpris- ing, since these countries cannot afford to import except on. easily repayable terms. Other exporting countries un- derstand this and are supporting their exporters by offering steadily increasing financing on attractive terms with low- interest rates, long maturities and gen- erous grace periods. This bill would remedy- this situation by setting up a new Export Development Credit Fund with authority to make credit available to pay for U.S. exports to the lowest-income countries on terms that are competitive. It would be able to finance about $1 billion per year at in- terest rates of perhaps 3 percent. The difference between such low rates and the approximately 7 percent it would cost the fund to borrow ,money from the U.S. public, would be paid for out of receipts on old aid loans which are now largely used for relending by AID. These receipts, which are increasing in volume each year, make it possible to establish such a Fund with borrowing authority similar to the Export-Import Bank, on a fiscally sound basis, and without charge to the U.S. budget. The Fund would only finance exports which actually helped with development, thereby enabling these countries to de- velop the ability to repay and to become better customers for our future exports. There would be no luxury items or mil- itary goods. And the Fund's clients would be the least developed countries where U.S. 'exports are lagging. Mr. President, the bill we are intro- ducing today is social statesmanship in the highest form, where two very im- portant U.S. goals can be served simul- taneously. I refer to the goal of help- ing the development of the lowest-in- come countries and the goal of helping U.S. exports, both immediately and in building markets for the future. As many as 80,000 U.S. jobs may be created once the Export Development Credit Fund gets into operation. Thus, Amer- ica's role in helping our less fortunate world neighbors need not be at the ex- pense of those in need at home. Rather, it can help them to get jobs, which we will agree is the most basic way to help them solve their problems. There is a third purpose served by the bill we introduce today. It recognizes that America's responsibilities with re- spect to the developing countries reach far beyond our aid programs. U.S. pol- icies on trade, investment, science pol- icy, oceans, debt relief and other sub- jects may affect very profoundly the destinies of poor countries. Yet until now, these policies are made without coordination?without system- atically informing ourselves of how they will affect our interests in development. This bill institutionalizes a coordinating procedure that would insure that the development factor was always consid- ered. That factor may not predominate, but at least it has to be heard. In order to do this, the bill sets up a Development Coordinating Committee and makes as its chairman, the head of Approved For Release 2001/08/30 : CIA-RDP75B00380R000600170055-2 S 11570 Approved For Release 2001/08/30: CIA-RDP75600380R000600170055-2 CONGRESSIONAL RECORD SENATE June 20, 1973 the Mutual Development and Coopera- tion Agency?the proposed successor to the AID, which is the agency most sensi- tively attuned to the subject of develop- ment. Mr. President, I believe this bill is a great improvement on present legislation. It will focus bilateral aid an the most pressing human problems.. It will put the great U.S. industrial machinery and agriculture at the service Of development while protecting U.S. exports and U.S. jobs. And it will weave into the fabric of our Government poli- cies some common threads of develop- ment. It will put America back onto Ek.. course in world affairs in which we can again lift our heads and be proud. And in my view, it will justly deserve arid receive the support of the people of America and the Congress. Mr. 'President, I ask unanimous con, sent that the full text of the bill along with a section-by-section analysis be printed at this point in the RECORD. There being na objection, the bill and analysis were ordered to be printed in the RECORD, as follows: S. 2026 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled. That this Act may be cited as the "Mutual Development and Cooperation Act of 1973." (b) Strike out "Agency for International Development" each place it appears in such Act and insert in lieu thereof in each such place "Mutual Development and Cooperation Ageircy". POLICY; DEVELOPMENT ASSISTANCE AUTHORIZA- TIONS SEC. 3. Chapter 1 of part I of the Foreign Assistance Act of 1961 is amended as fol- lows: (a) In the chapter heading, immediately after "CHAPTER 1?POLICY" insert "; DEVEL- OPMENT ASSISTANCE AUTHORIZATIONS". (b) In section 102, relating to statement of policy, insert "(a)" immediately after "STATEMENT OF' POLICY.?", and at the end thereof add the following: "(b) The Congress further finds and de- clares that, With the help of United States economic assistance, progress has been made in creating a base for the peaceful advance of the less developed countries. At the same time, the conditions which shaped the United States foreign assistance program in the past have changed. While the United States must continue to seek increased co- operation and mutually beneficial relations with other nations, our relations with the less developed countries must be revised to reflect the new realities. In restructuring our relationships with these countries, the Presi- dent should place appropriate emphasis on the following criteria: "(1) Bilateral development aid should concentrate increasingly on sharing Amer- ican technical expertise, farm commodities, and industrial goods to meet critical de- velopment problems, and less on large-scale Capital transfers, which when made should be in association with contributions from other industrialized countries working to- gether in a multilateral framework. "(2) Future United States bilateral sup- port for development should focus on critical problems in those functional sectors which affect the lives of the majority of the people in the developing countries: food production, rural development and nutrition; population planning and health; education, public ad- ministration, and human resource develop- ment. "(3) United States cooperation in develop- ment should be carried out to the maximum extent possible through the private sec- tor, particularly those institutions which already have ties in the developing areas, such as educational institutions, coopera- tives, credit unions, and voluntary agencies. "(4) Development planning must be the responsibility of each sovereign country. United States assistance should be ad- ministered in a collaborative style to sup- port the development goals chosen by each country receiving assistance. "(5) United States bilateral development assistance should give the highest priority to undertakings submitted by host govern- ments which directly improve the lives of the poorest majority of people and their capacity to participate in the development of their countries. "(6) United States development assistance should continue to be available through bilateral channels until it is clear that multi- lateral channels exist which can do the job with no loss of development momentum. "(7) Under the policy guidance of the Secretary of State, the Mutual Develop- ment and Cooperation Agency should have the responsibility for coordinating all United States development-related activities. The Administrator of the Agency should ad- vise the President on all United States actions affecting the development of the less- developed countries, and should keep the Congress informed on the major aspects of United States interests in the progress of those countries." (c) At the end thereof, add the following new sections: "SEc. 103. FOOD AND NUTRITION.?In order to prevent starvation, hunger, and malnu- trition, and to provide basic services to the people living in rural areas and enhance their capacity for self-help, the President is authorized to furnish assistance, on such terms and conditions as he may determine, for agriculture, rural development, and nutrition. There is authorized to be appro- priated to the President for the purposes of this section, in addition to funds otherwise available for such purposes, $300,000,000 for each of the fiscal years 1974 and 1975, which amounts are authorized to remain available until expended. "SEC. 104. POPULATION PLANNING AND HEALTH.?In order to increase the opportuni- ties and motivation for family planning, to reduce the rate of population growth, to prevent and combat disease, and to help pro- vide health services for the great majority, the President is authorized to furnish assist- ance on such terms and conditions as he may determine, for population planning and health. There is authorized to be appropriated to the President for the purposes of this section, in addition to the funds otherwise available for such purposes, $150,000,000 for each of the fiscal years 1974 and 1975, which amounts are authorized to remain available until expended. "Sac. 105. EDUCATION AND HUMAN RESOURCE DEVELOPMENT.?In order to reduce illiteracy, to extend basic education and to increase manpower training in skills related to de- velopment, the President is authorized to furnish assistance on such terms and condi- tions as he may determine, for education, public administration and human resource development. There is authorized to be appropriated to the President for the pur- poses of this section, in addition to funds otherwise available for such purposes, $115,000,000 for each of the fiscal years 1974 and 1975, which amounts are authorized to remain available until expended. "SEc. 106. SELECTED DEVELOPMENT PROD - LEMS.?The President is authorized to fur- nish assistance on such turns and conditions as he may determine, to help solve economic and social development problems in fields such as transportation and power, industry, urban development and export development. There is authorized to be appropriated to the President for the purposes of this section, in addition to funds otherwise available for such purposes, $93,000,000 for each of the fiscal years 1974 and 1975, which amounts are authorized to remain available until expended. "SEc. 107. SELECTED COUNTRIES AND ORGA- NIZATIONS .?The President is authorized to furnish assistance on such terms and condi- tions as he may determine, in support of the general economy of receipient countries or for development programs conducted by private or international organizations. There is authorized to be appropriated to the Presi- dent for the purposes of this section, in addi- tion to funds otherwise available for such purposes, $60,000,000 for each of the fiscal years' 1974 and 1975, which amounts are authorized to remain available un til expended. 'SEc. 108. APPLICATION OF EXISTING PROVI- sxoNs.?Assistance under this chapter shall be furnished in accordance with the pro- visions of title I, II, VI, or X of chapter 2 of this part, and nothing in this chapter shall be construed to make inapplicable the restrictions, criteria, authorities; or other provisions of this or any other Act in accord- ance with which assistance furnished under this chapter would otherwise have been provided. "SEc. 109. TRANSFER OF FUNDS.?NotWith- standing the preceding section, whenever the President determines it to be necessary for the purposes of this chapter, not to exceed 15 per centum of the funds made available for any provision of this chapter may be trans- ferred to, and consolidated with, the funds made available for any other provision of this chapter, and may be used for ally of the pur- poses for which such funds may be used, ex- cept that the total in the provision for the benefit of which the transfer is made shall not be increased by more than 25 per centum of the amount of funds made available for such provision.". DEVELOPMENT LOAN FUND Sac. 4. Section 203 of chapter 2 of part I of the Foreign Assistance Act of 1961 is amended as follows: (a) Strike but "the Mutual Security Act of 1954, as amended," and insert in lieu thereof "predecessor foreign assistance legislation". (b) Strike out "for the fiscal year 1970, for the fiscal year 1971, for the fiscal year 1972, and for the fiscal year 1973" and insert in lieu thereof "for the fiscal years 1974 and 1975 for use for the purposes of chapter 1 of this part and part V of this Act and". ADMINISTRATIVE POSITIONS SEC. 5. Chapter 2 of part III Of the Foreign Assistance Act of 1961, relating to adminis- trative provisions, is amended as follows: (a) In section 638, relating to Peace Corps assistance, insert before the period at the end thereof "; or under part V of this Act". (b) At the end thereof, add the following new section: "SEc. 640B. COORDINATION.?(0.) The Presi- dent shall establish a system for coordination of United States policies and programs which Approved For Release 2001/08/30: CIA-RDP75600380R000600170055-2 lane 20, 1973 Approved For Release 2001/08/30 : CIA-RDP75600380R000600170055-2 CONGRESSIONAL RECORD:--- SENATE S 11571 affect United States interests in the develop- ment of low-income countries. To that end, the President shall establish a Development Coordination Committee which shall advise him with respect to coordination of United States policies and programs affecting the development of the developing countries, in- cluding programs of bilateral and multilat- eral development assistance. The Cornrnittee shall include the Administrator, Mutual De- velopment and Cooperation Agency, Chair- man; the Under Secretary for Economic Af- fairs, Department of State; the Assistant Secretary for International Organization Af- fairs, Department of State; the Assistant Secretary for International Affairs, Depart- ment of the Treasury; the Assistant Secre- tary for International Affairs and Commodity Programs, Department of Agriculture; the Assistant Secretary for Domestic and Inter- national Business, Department of Commerce; the President, Export-Import Bank of the United States; the President, Overseas Pri- vate Investment Corporation; the Special Representative -for Trade Negotiations, Ex- ecutive Office of the President; and the Ex- ecutiVe Director, Council on International Economic Policy. "(b) The President shall prescribe appro- priate procedures to assure coordination among representatives of the United States Government in each country, under the di- rection of the Chief of the United States Diplomatic Mission. "(c) Programs authorized by this Act shall be undertaken with the foreign policy guid- ance of the Secretary of State. . "(d) The Chairman of the Development Coordination Committee shall report annu- ally to the President and the Congress on 'United States actions affecting the develop- ment of the low income countries.". ? ? UNITED STATES EXPORT DEVELOPMENT CREDIT FUND SEC. 6. The Foreign Assistance Act of 1961 is amended by adding at the end thereof the following new part: "PART V "Sac. 801. GENERAL Aurnoarry.?(a) In the Interest of increasing United States exports to the lowest income countries, thereby con- tributing to high levels of employment and Income in the United States and to 'the establishment and maintenance of long- range, growing export markets, while pro- moting development of such countries, the' President shall establish a fund, to be known fig the 'United States Export Development Credit Fund', to be used by the President to carry out the authority contained in this part. "(b) The President is authorized to pro- vide extensions of credit and to, refinance United States exporter credits, for the pur- pose of facilitating the sale of United States goods and services to the lowest income countries which advance their development. The provisions of section 201(d) of this Act shall apply to extensions of credit under this part. The authority contained in this part shall be used to extend credit in connection with the sale of goods and services which are of developmental character, with due regard for the objectives stated in section 102(b) of this Act. "(c) The receipts and disbursements of the Fund in the discharge of its functions shall be treated for purposes of the budget of the United States Government in the same fashion as the receipts and disbursements of the Export-Import Bank of the United States under section 2(a) (2) of the Export-Import Bank Act of 1945, as amended, ? "Sac. 802. FINANCING.? ( ) AS may here- after be provided in annual appropriation Acts, the President is authorized to borrow from, whatever source he deems appropriate, during the period from the enactment of this part through December 31, 1977, and to issue and sell such obligations as he de- termines necessary to carry out the pur- poses of this part: Provided, That the aggre- gate amount of such obligations outstanding at any one time shall not exceed one-fourth of the amount specified in section 7 of the Export-Import Bank Act of 1945, as amended. The dates of issuance, the maximum rates of Interest, and other terms and conditions of the obligations issued under this subsec- tion will be determined by the Secretary of tl,te Treasury with the approval of the Presi- dent. Obligations issued under the author- ity of this section shall be obligations of the Government of the United States. of America, and the full faith and credit of.the United States of 'Anierica is hereby pledged to tho full payment of principal and interest thereon. For the purpose of any purchase of the obligations issued under this part, the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under the Second Liberty Bond Act, as now or hereafter in force, and purposes for which securities may be issued under the Second Liberty Bond Act, as now or hereafter in force, are extended to include any purchases of the obligations issped under this part. The Secretary of the Treasury may, at any time, sell any of the obligations acquired by him under this section. All redemptions, pur- chases, and sales by the Secretary of such obligations shall be treated as public debt transactions of the United States. "(b) Except as otherwise provided in sec- tion 806, the amounts borrowed under sub- section (a) of this section shall be paid into the Fund and used to carry out the purposes of this part. Any difference between the in- terest to be repaid on export credits made under this part and the interest paid by the Fund on obligations incurred under sub- section (a) of this section shall be paid into the Fund out of receipts specified in sec- tion 203 of this Act. ? "(a) Receipts from lOans made pursuant to this part are authorized to be made avail- able for the purposes of this part. Such receipts and other funds made available for the purposes of this part shall remain avail- able until expended. "Sac. 803. LENDING CEILING AND TER MINA- TION.?(a) The United States Export De- velopment Credit Fund shall not have out- standing at- any one time loans in an ag- gregate amount in excess of one-fourth of the ainount specified in section 7 of the Ex- port-Import Bank Act of 1945, as amended. "(b) The United States Export Develop- ment Credit Fund shall continue to exercise Its functions in connection with and in fur- therance of its objectives and purposes until the close of business on December 31, 1977, but the provisions of this section shall not be construed as preventing the Fund from lacquiring obligations prior to such date which mature subsequent to such date or from assuming prior to such date liabil- ity as acceptor of obligations which mature subsequent to such date or from issuing either prior or subsequent to such date, for purchase by the Secretary cif the Treasury or any other purchasers, its obligations which mature subsequent to such date or from continuing as an agency of the United States and exercising any of its functions subsequent to such date for purposes of orderly liquidation, including the adminis- stration of its assets and the collection of any obligations held by the Fund. "SEC. 804. REPORTS TO TIIE CONGRESS .?T1-1 C President shall transmit to the Congress semi-annually a complete and detailed report of the operations of the United States Export Development Credit Fund. The report shall be as of the close of business on June 30 and December 31 of each year. "Sac. 805. ADMINISTRATION OF FTJND.?The President shall establish a committee to ad- vise him on the exercise of the functions conferred upon him by this part. The com- mittee shall include the Secretary of Com- merce, the Secretary of the Treasury, the Secretary of State, the President of the Ex- port-Import Bank and the Administrator of the Mutual Development and Coopera- tion Agency. ' . "Sac. 806. PROVISION FOR Lossas.?Ten per centum of the amount authorized to be borrowed under subsection 802(a) shall be reserved and may be used to cover any losses incurred on loans extended under this part. Receipts specified in section 203 of this Act may also be paid into the Fund for the, purpose of compensating the Fund for any such losses. "Sac. 807. EXPORT-IMPORT BANK POWERS.? Nothing in this part shall be construed as a limitation on the powers of the Export-Im- port Bank of the United States. "Sac. 808. PROHIBITION OF LOANS FOR DE- FENSE ARTICLES OR SERVICES.?The authority contained in this part shall not be used to extend credit in connection with the sale of defense articles or defense services. This pro- vision may not be waived pursuant to sec- tion 614 of this Act or pursuant to any other provision of this or any other Act. "Sac. 809. DEFINITIONS.?As used in this part? (a) 'Lowest income countries' means the poorer developing countries, with particular, but not exclusive, reference to countries in which, according to the latest available United Nations statistics, national product per capita is less than $200 a year.". REFERENCES TO EXISTING ACT AND ADMINISTERING AGENCY SEC. 7. All references to the Foreign As- sistance Act of 1961, as amended, and to the Agency for International Development shall be deemed to be references also to the Mutual Development and Cooperation Act of 1973 and to the Mutual Development and Cooperation Agency, respectively. All refer- ences in the Mutual Development and Co- operation Act of 1973 to "this Act" or to any provisions thereof shall be deemed to be references also to the Foreign Assistance Act of 1961, as amended, or to the appro- priate provisions thereof, and references to "the agency primarily responsible for ad- ministering part I" shall be deemed refer- ences also to the Agency for International Development. All references to the Mutual Development and CoOperation Act of 1973 and to the Mutual Development and Coopera- tion Agency shall, where appropriate, be deemed references also to the Foreign As- sistance Act of 1961, as amended, and to the Agency for International Development, re- spectively. ! SECTION-BY-SECTION ANALYSIS OF THE Mu TUAL DEVELOPMENT AND COOPERATION ACT or 1973 I. INTRODUCTION The Mutual Development and Cooperation Act of 1973, (the "bill") amends the Foreign Assistance Act of 1961, as amended (the Approved For Release 2001/08/30 : CIA-RDP75600380R000600170055-2 11572 Approved For Release 2001/08/30 : CIA-RDP75600380R000600170055-2 CONGRESSIONAL RECORD -- SENATE June 20, 1973 "Act") by making certain changes in pro- The bill provides authorizations for the visions relating to development assistance. five categories for the fiscal years 1974 and and by adding a separate authority for a 1975 in a total amount essentially the same fund to finance increased U.S. exports to the as that proposed by the Executive Branch, lowest income countries. It does not purport but with somewhat different distribution to deal in a comprehensive way with all 'the among the five categories. Activities falling programs authorized by the Act. into more than one category may be fund- IT. PROVISIONS OF TIIE DILL ed from one or more categories, as ap- Sec lion 2. Mutual Development and Coopera- propriate. Funds are to be used in accord- tion Act ance with existing provisions of law, but the . bill provides for somewhat greater trans- (a) This subsection changes the title of ferability of funds among the five categories the basic legislation authorizing the U.S. than is now permitted among present fund- bilateral foreign economic and military as- ing categories in the Act. sis Lance programs from "The Foreign As- The seven new sections are the following: skitance Act of 1961" to "The Mutual Devel- Section 103, which authorizes the eppro- opulent and Cooperation Act of 1973". priation of $300 million for each of the fiscal ( b ) This subsection changes the name of the agency responsible for administerin, years 1974 and 1975 for agriculture, rural U.S. bilateral foreign economic assistance development, and nutrition. Section 104, which authorizes the appro- programs from the "Agency for Internation- priation of $150 million for each of the fiscal al Development" to the "Mutual Develop- years 1974 and 1975 for population-planning ment and Cooperation Agency". and health. Section 3. Policy; Development Assistance Section 105, which authorizes the appro- Authorizations' priation of $115 million for each of the fiscal (a) This subsection changes the name of years 1974 and 1975 for education, public chapter 1 of the Act to reflect the fact that administration, and human resource devel- the bill adds authorizations for various cate- opment. gories of development assistance to the ex- Section 106, 'which authorizes the appro- isting provisions of the chapter, which relate priation of $93 million for each of the fiscal to policy. years 1974 and 1975 to help solve economic (b) This subsection calls for the restruc- and social development problems in fields -Wring of U.S. relationships with developing such as transportation and power, industry, countries, in the light of progress made and and urban development. changed conditions, to reflect the new real- Section 107, which authorizes the appro- ities, with emphasis on several criteria; priation of $60 million for each of the fiscal (1) increased concentration of bilateral years 1974 and 1975 to support the general assistance programs on sharing American economy of selected countries, primarily technical expertise, farm commodities, and through program lending, or to contribute industrial goods to meet critical development to certain development programs conducted problems, and less concentration on large- by private organizations such as the Inter- scale capital transfers, which when made national Executive Service Corps (IESC), the should be in a multilateral framework; Asia Foundation, cooperatives, credit unions, (2) focus on problems in agriculture and and voluntary agencies, or by International rural development, education, health, fam- organizations such as the Organization of ily planning, and other areas affecting the American States (OAS). lives of the majority of the people in the sec..= ti 108, which requires assistance au- developing countries; thorized under this chapter to be furnished (3) maximum use of the private sector, in accordance with the provisions of law ap- especially institutions with ties in develop- plicable to one of the categories of assistance tog areas, such as educational institutions, . now in the Act (Development Loans, Tech- cooperatives, credit unions, and voluntary nical Cooperation and Development Grants, agencies; Alliance for Progress, or Programs Relating to (4) collaborative style of administering .Population Growth), and which assures that U.S. bilateral development assistance pro- the restrictions, criteria, authorities, and grams to support recipient countries' own other provisions of law which would have development goals; applied to the provision of this assistance, (5) highest priority for programs which if the funding categories had not been re- directly improve the lives of the poorest peo- structured, are not rendered inapplicable as Pie and their capacity to participate in de- a result of the restructuring. , vel opmen t; Section 109, which provides for limited (6) availability of bilateral development transferability of funds among the five new assistance until multilateral agencies can categories of assistance, permitting up to carry on with no loss of development mo- 15 per cent of the funds made available for xi-lent-tun; any of the five categories to be transferred (7) responsibility on the Administrator to any of the other four, provided that the of the Mutual Development and Coopera- category to which the funds are transferred tion Agency, under the Secretary of State'S is not thereby increased by more than 25 policy guidance, for coordinating (though per cent (leaving transfers between any of not controlling) all U.S. activities relating the five new categories and any other funds to overseas development, advising the Presi- appropriated under the Act to be governed dent on all U.S. actions affecting develop- by an existing provision, Section 610 of the merit, and informing the Congress on U.S. Act). interests in development progress. Section 4. Development Loan Fund (c) This subsection adds seven new sec- (a) This subsection amends the existing Ideas (sections 103-109) to chapter 1 of the loan receipt reuse authority of Section 203 Act, which together constitute a completely of the Act to include dollar receipts from new system of authorizing the appropria- loans made under all predecessor foreign as- tion of funds for bilateral development as- sistance legislation. sistance. Whereas previous authorizations (b) This subsection extends the loan re- lieve provided funds for Development Loans, ceipt reuse authority to fiscal years 1974 and Technical Cooperation and Development 1975 and authorizes reuse for the restruc- Gran ts, Alliance for Progress, and Programs tured categories of development assistance Isolating to Population Growth, the bill au- contained in the bill as well as for specified thorizes funds in five categories divided purposes of the new United States Export primarily according to sector or field of ac- Development Credit Fund created by the tivity: Food and Nutrition, , Population Planning and Health, ?4 lApprovediFor- R i t ereaLe gong, ,49rdt94-BRU5B? man Resource Development, -Selected Devel- ov opment Problems, and Selected Countries (a) This eubsection. puts the United flint Organizations. ? States Export Development Credit Fund on the same footing AS the Export-Import Bank, the Peace Corps, - and the Mutual Educa- tional and Cultural Exchange program, by exempting the Fund from prohibitions on assistance to any country contained in the Act. (b) This subsection adds a new section 610B to the Act, requiring the President to establish a system for coordinating U.S. poli- cies and programs affecting U.S. interests in overseas development and, to that end, to establish a Development Coordination Com- mittee to advise the President, chaired by the Administrator of the Mutual Develop- ment and Cooperation Agency, with mem- bers drawn from various interested Execu- tive Branch agencies; requiring coordina- tion abroad under the direction of the Chief of the U.S. Diplomatic Mission; asserting the Secretary of State's foreign policy guid- ance of programs authorized by the Act; and requiring the Chairman of the Develop- ment Coordination Committee (the Admin- istrator of the Mutual Development and Co- operation Agency) to report annually to the President and the Congress on U.S. ac- tions affecting development. Section 6. United States export development credit fund This section adds a new part to the Act (Sections 801-809), creating a fund for the purpose of increasing U.S. experts to the lowest income countries. Section 801 (general authority) establishes the Fund, to be known as the "United States Export Development Credit Fund"; author- izes the President to extend credit or refi- nance U.S. exporter credits, on terms no easier than the minimum terms specified by law for development lending under part I of the Act, to facilitate the sale of U.S. goods and services of a devolpmental character to the lowest income countries; and provides that the Fund shall be treated in the same fashion as the Export-Import Bank for pur- poses of exclusion from budget totals and exemption from expenditure and outlay lim- itations, including requirements for trans- missien of an annual budget and an annual report to the Congress. Section 802 (financing) authorizes the President, as may be provided in appropria- tion acts, to borrow up to one-fourth (cur- rently $5 billion) of Export-Import Bank ? loan, guaranty, and insurance authority, dur- ing the period from the enactment of this legislation through December 31, 1977, to be used (except for $500 million of reserves) for the puposes of the Fund. Any difference be- tween the interest the borrowers are to pay to the Fund or export credits extended (at low rates of interest) and the interest the Fund pays on the funds it borrows (at higher rates of interest), which constitutes an "In- terest subsidy", must be paid into the Fund from dollar receipts from loans made under foreign assistance legislation. Receipts from loans made by the Fund, if not needed to pay interest or repay the principal on the Fund's obligations, may be reused for the purposes of the Fund, and all deobligated funds may be reobligated for the purposes of the Fund. Section 803 (lending ceiling and termina- tion) places a lending ceiling on the principal amount of loans by the Fund outstanding at any one time amounting to one-fourth (cur- rently $5 billion) of the Export-Import Bank loan, guaranty, and Insurance ceiling, and authorizes the Fund to operate until Decem- ber 31, -1977. Section 804 (reports to the Congress) re- "quires a detailed report on the operations of the Fund to be transmitted to the Congress semi-annually. Section 805 (administration of Fund) re- G Oish an advisory corn PA9.9111199M Secretaries of Commerce, Treasury, and State; the Presi- dent of the Export-Import Bank; and the Awe 20, 1973 Approved For Release 2001/08/30 : CIA-RDP75600380R000600170055-2 CONGRESSIONAL RECORD ? SENATE S 11573 Administrator of the Mutual Development and Cooperation Agency. Section 806 (provision for losses) reserves 10 per cent ($500 million) of the Fund's bor- rowing authority to cover losses and pro- vides that receipts from loans made under foreign assistance legislation may also be used for that purpose. Any amounts bor- rowed from the reserve would eventually have to be repaid, and foreign assistance re- ceipts could be used for that purpose. Losses may include loans written off or payments suspended or deferred, or the interest pay- ments required to service funds borrowed in the amount of the loans written off Or pay- ments suspended or deferred. Section 807 (Export-Import Bank powers) provides that this part does not 'limit the powers of the Export-Import Bank. Section 800 (definitions) defines "lowest income countries" as the poorer developing countries with special reference to coun- tries where national product per capita is under $200 a year. Section 7. References to Existing Act and Administering Agency This section assures that the change of the title of the Act to "Mutual Development and Cooperation Act of 1973" and of the name of the administering agency to "Mu-. tual Development and Cooperation Agency" will not affect existing or future references to either. May 30, 1973. Mr. HUMPHREY. Mr. President, the Mutual Development and Cooperation Act of 1973 has received widespread bi- partisan support which I would like to.. bring to the attention of my colleagues. During the testimony on this legislation in the House Foreign Affairs Committee, several witnesses with considerable ex- perience in the problems of development made statements in support of this new approach to foreign aid. I ask unanimous consent that state- ments by Mr. Orville Freeman, Mr. James P. Grant, Mr. Douglas Dillon, and Mr. David Rockefeller, along with two articles in the Christian Science Monitor and one editorial in the New York Times be printed at this point in the RECORD. There being no objection, the material was ordered to be printed in the RECORD, as follows: STATEMENT OF ORVILLE L. FREEMAN* Mr. Chairman and Members of the Com- mittee: First I would like to congratulate the Committee for the proposals under dis- cussion today. In my opinion, they represent the kind of bold new approach to foreign assistance necessary both for the develop- ment of the world's less developed nations, and ultimately for the benefit of all na- tions, rich and poor. THE PROPOSED EXPORT DEVELOPMENT CREDIT FUND Available evidence indicates that the United States Is rapidly losing ground to other developed nations in the supplying of goods to the world's poorest nations?those with per capita incomes .below $200. In many cases the reason for our lagging position is not our inability to produce the needed goods at competitive prices, but our failure to offer the goods on terms commensurate with the ability of the poorest nations to pay. While the Export-Import Bank, which provides credit on only slightly concession- *The Views expressed in this testimony are those of the witness, MAKIN69,*?.ffritb sadly represent those of B tional Corporation, or others of its Directors, officers, or staff. ary terms, has provided powerful encourage- ment for American exports to these nations with incomes above $200, it has had little impact on sales to the lowest income na- tions. By contrast, Eurjape and. Japan have continually increased their level of comes- Nsionary financing for the poorer countries. As a result, the United States has not been able to compete effectively for this growing market, which includes about 60 percent of the world's people. Therefore I wish to express my emphatic support for the proposed Export Develop- ment Credit Fund, This Fund, if estab- lished, would permit a significant growth in American exports to the poor countries. This would mean tens of thousands of new j6bs for American workers. At the same time the goods and machinery we can supply 'could serve as a catalyst for sustained eco- nomic growth in many poor nations. This economic growth which is so badly needed in the poor nations can be viewed E4s a worthy goal in itself. However, a genera- tion of experience also indicates that eco- nomic progress in developing nations can lead to a future rapid growth in exports from the more advanced nations. The eco- nomic development which today's financed exports can help promote, then, can provide escalating future benefits both for the poor countries and for the United States. Our 18 years of experience with 'Public Law 480, the legislation which enabled ns, to export farm products to low income coun- tries on concessional terms, is instrtfetive in considering this legislation. That legislation had two important objectives: to reduce U.S. farm surpluses and to alleviate hunger in the recipient countries, helping them buy time with which to modernize their own agricultural economies. A large number of ' these countries have been remarkably suc- cessful as. is evidenced by the pronounced decline in requests for food aid over the past six or eight years. An important by-product of PL 480 was tne development of dollar markets for U.S. farm exports as various developing countries acquired a capability for commercial im- ports. Fortunately for our balance of pay- ments, U.S. commercial exports of farm products are soaring, climbing from under $5 'billion in 1965 to an estimated $11 bil- lion in the fiscal year ending this month, Public Law 480 exports meanwhile have de- clined from $1.32 billion to about $1 bil- lion. Countries which became accustomed to us- ing U.S. farm products when they were avail- able under concessional terms continued to use them as they switched to commercial purchases. Established working relationships with U.S. exporters also facilitate continu- ing purchases of U.S. farm products. In effect,- what is being proposed in this legislation is a program to develop conces- sional markets for U.S. industrial exports in markets where we are losing out to other industrial exporters. Those countries where Incomes are below $200 contain a majority of the world's people. Someday they will con- stitute a large and lucrative market for our exports, as do a number of the richer devel- oping countries today. If we can establish ourselves as suppliers during the early stages of economic development, then we will have an opportunity to remain as suppliers in the future when markets will be far more lucrative than they are today. If we are to ensure the participation of American producers in the future growth of the developing countries, we must act now to build the healthy trading relationships that are needed. Business experience indi- cates that export potential will be maxi- rilOVRART ? VPrid WARRIVo5120gtetaVirtraggilyTliesrli= 131.1 ing which would be provided by the proposed Export Development Credit Fund would be an important step in the right direction. Furthermore, if American firms achieve a stronger position as suppliers of developing country markets, then as these markets grow we can expect to sec added opportuni- ties for American investments in many na- tions. Once countries are using a given piece of imported equipment extensively, whether It be a machine tool or a computer, they often become interested in having it pro- duced domestically once the market becomes sufficiently large. Not surprisingly, invest- ment frequently follows exports. Recent studies of U.S. corporations with holdings abroad show that significant num- bers of jobs at home in the United States, as well as a sizable level of exports, are gen- erated through the need to supply the fac- tories abroad with necessary inputs. Estab- lishment of a position as a supplier of goods is often the prerequisite of successful in- vestment in a foreign country, however. Thus without the kind of impetus to Ainer- lean exports to developing nations which the Export Development Credit Fund could pro- vide, our potential future role in ninny na- tions may be foreclosed by the actions of other developed nations, which are current- ly building profitable economic relationships in these nations with greater care and fore- thought than we are. Filially on this subject, I would like to point out the proposed Fund's potential in improving our long-term balance of trade 'position. Many feel that our growing trade deficits constitute the greatest single threat to the welfare of the United States today. I do not think we would be wise to pass up te opportunity this proposed Fund provides to bolster our future trading position among such a large number of countries. Our mutual interest in agricultural develop- ment At this point I would like to turn to an additional aspect of the new foreign assist- ance proposals?the focus on solving cer- tain key problems with a particular effort to reach the poorest sectors of the popula- tion within developing countries. For many reasons, I think that the new emphasis is highly desirable. Since I have a special in- terest in the development of agriculture and the world food situation, I will first make some observations on these crucial subjects. This year, while acting to meet the threat of famine in parts of Africa and India, those concerned with the global food situation have seen world reserve stocks of essential grains sink to their lowest level in more than two decades. The Director-General of the Food and Agriculture Organization of the United Nations, Dr. A. IL Boerma, has noted that the world is currently just one bad harvest away from widespread famine and critical shortages of foodstuffs. Fortunately, the outlook for this season's crops is good In many crucial areas of the world and, out- side of portions of sub-Saharan Africa, star- vation may be largely avoided. But while keeping our fingers crossed dur- ing the coming year, we need to look forward to the next decade and beyond. In my opin- ion, the world food outlook is not a bright one. It seems very likely that global food reserves will not soon be rebuilt to the rather consistently high levels of the 1950's and 1960's. The capacity of food donor countries, including the United States, to aid those which are having difficulty meeting their own food needs will'be severely diminished. Such a new situation is likely because global de- mand for many important food commodities may rise considerably faster than our ability to expand supplies in the coming years. ducer familiarity with the particular needs aware for the first time of the inexorable of tho buying country. The soft-term financ- logic of supply and demand. The news media 11574 Approved For Release 2001/08/30: CIA-RDP75600380R000600170055-2 CONGRESSIONAL RECORD ? SENATE June 20, 1973 have correctly pointed to several factors, in- cluding poor harvests in Asia and the Soviet Union, the disappearance of the anchoveta off the coast of Peru, and bad weather in the United States, as contributing to the current enort supply of important food commodities. le is my feeling, however, that these short- term factors may be diverting our attention from some more fundamental longer term trends which are altering the dimensions of the world food situation. Throughout human history, population growth has accounted for nearly all the grow- ing demands which were made on the earth's food-producing capacity. During the seven- ties rapid population growth continues to generate demand for more food, but in ad- dition we are now witnessing the emergenee. or rising affluence as a major new claimant on world food resources.. Historically there was only one important source of growth in world demand for food, but now there are two. At the global level, population growth is still the dominant source of growth in de- mand for food. Expanding at nearly 2 per- cent per year, it will double in a little more than a generation. Merely maintaining cur- rent per capita consumption levels will there- fore require a doubling of food output over the next generation. Population growth is slowing in most rich countries and in a few poor countries, but throughout most of the world it continues to be very rapid. The world currently divides Into essentially two groups of countries in demographic terms: the rich countries, which have low rates of population growth, and the poor countries, most of which have rapid rates of population growth. Fully four-fifths of the annual increment in world population of an estimated 70 million occurs in the poor countries. ? Some of the relatively small poor countries add more to the world's annual population gain than the larger rich ones. Mexico, for example, now contributes more to world pop- ulation growth than does the United States. The Philippines adds more people each year than does Japan. Brazil adds 2.6 million addi- tional people in a year while the Soviet Union adds only 2.4 million. The effect of rising affluence on the world demand for food is perhaps best understood by examining its effect on grain requirements.' Grain consumed directly provides 52 percent of man's food energy supply. Consumed indi- rectly in the form of livestock products, it provides a sizeable share of the remainder. In resource terms, grains occupy more than 70 percent of the World's crop area. In the poor countries the annual availa- bility of grain per person averages about 400 pounds per year. With only this much grain available, nearly all must be consumed di- rectly to meet minimum energy needs. Lit- he can be spared for conversion into animal protein. Throughout the world, per capita grain requirements rise with incomes. The amount of grain consumed directly rises with income until per capita income approaches $500 per year, whereupon it begins to decline, eventu- ally leveling off at about 150 pounds. How- ever, total grain consumed, directly and indirectly, continues to rise rapidly as per capita, income climbs. As yet no nation ap- pears to have reached a level of affluence where its per capital grain requirements have stopped rising. Within the United States and Canada, per capita grain utilization is currently ap- proaching one ton per year. Of this total, only about 150 pounds is consumed directly In the form of bread, pastries, and break.. iast cereals. The remainder 'is consumed in- There is now a northern tier of industrial countries?beginning with Ireland and Brit- ain in the West and including Scandinavia, Western Europe, Eastern Europe, the Soviet Union and Japan?which are more or less where the United States WAS in terms of its economic advancement and dietary habits in 1910. As incomes continue to rise in this group of countries containing some two- thirds of a billion people, a sizable share of the additional income 1.s being converted into demand for livestock products, Partic- ularly beef. These countries (many of them densely populated, such as the Western European countries and Japan, or suffering from a scarcity of fresh water, as is the Soviet Union), lack the capacity to satisfy the growth in demand for livestock products entirely from indigenous resources. The result Is growing imports of livestock products, or of feedgrain.s and soybeans with which to expand indigenous livestock production. From both continuing population growth and spreading affluence, then, we can expect pressures on the world's food resources to continue increasing rapidly. I believe that it will be very difficult to adequately meet these rising pressures within the world's present pattern of food production. Interna- tional stocks of important grains are likely to remain at a dangerously low level. Perhaps two thirds of the roughly 50 million acres of cropland in the United States which were idled under farm programs through much of the sixties, and which in a very real sense have served as the world's food safety valve, are likely to be brought back into near- permanent production. If this situation comes about, developing countries will have nowhere to turn for food aid when bad weather, insects or a disease outbreak sharply diminish or even destroy a year's crop, or if population growth greatly outstrips indig- enous producing capacities. Global food scarcity may force us to tighten our bolts but in the poor countries it may require forfeiture of life itself. This unpleasant possibility underscores the need for promoting agricultural development in the developing countries with a special urgency, I support very strongly the inclu- sion of explicit attention to the problem of food production in the current legislative proposals. The world's greatest reservoir of unexploited food potential is in the develop- ing countries. Rice yields per acre in India and Nigeria are only one-third those of Japan. and corn yields in Thailand and Brazil are less than one-third those of the United States. In ,these countries and many others, dramatic increases in food supply are pos- sible if farmers are given the necessary eco- nomic incentives, agricultural inputs, and technical know-how. The United States has proven its ability to play a valuable role in aiding agricultural development abroad, and we should take even fuller advantage of our expertise in this domain. If the food producing capacities of many important developing countries do not in- crease substantially within the next decade, there are likely to be many unfortunate con- sequences for the United States. A growing worldwide increase in demand relative to supply will tend to drive food prices upward, not only in international markets, but at home as well. If we should try to isolate our- selves from world scarcity, the situation could arise where famine and misery take a growing toll in many poor countries while we in the United States consume a disproportionately large share of the world's food production? clearly an unpalatable alternative. A policy of isolation on the food front might also se- riously jeopardize many crucial foreign sup- plies of nn-foo d resources, including energy est of the United States to aid the develop- ment of agriculture in the developing world. SMALLER FAMILIES THROUGH SOCIAL PROGRESS Another important factor in the world food situation is of course population growth. Slowing rapid population growth will servo the development interests of tho poor coun- tries, and will also servo the interuits of the world community by helping to reduce the ultimate number of claimants on the world's finite resources, both food and non-food. In this context, the focus in the proposed law on reaching the poorest sectors within de- veloping countries, and the complementary emphasis on rural development, represent a sophisticated and necessary comprehensive approach to the urgent need for slowing pop- ulation growth. History has shown that birthrates do not usually decline voluntarily in the absence of a minimal level of social amenities, includ- ing literacy, an assured food supply, a re- duced infant mortality rate, and at least rudimentary health services. By placing an increased emphasis on meeting these basic needs, particularly in the rural areas?where the majority of the world's people live?the United States can simultaneously help the world's forgotten majority attain a more de- cent life and stem the rapid population growth which threatens the well-being of everyone. At the same time, rural agricultural development will help reduce the massive employment and rural-urban migration prob- lems confronting many poor countries. In the past some have suggested that there is a conflict between the goals of rapid eco- nomic growth and the widespread distribu- tion of the benefits of growth among the population. Recent evidence from several na- tions, however, hes proven that this is not necessarily the case. Several Asian countries have combined rapid economic grovrth with greatly improved income distribution, and have also experienced considerably reduced unemployment and falling birth rates, which have been brought down further with the introduction of effective, national family planning programs. Looking specifically at agriculture, evidence from various parts of the developing world indicates that intensively farmed small hold- ings are generally considerably more pro- ductive on a per acre basis than larger hold- ings. Thus the goal of widespread, employ- ment-creating agricultural development goes hand in hand with the need to significantly expand food production in the developing countries and to increase the motivation for smaller families. POTENTIAL BENEFITS OF THE NEW "PROBLEM SOLVING" APPROACH I would like to end my testimony by com- menting on an aspect of the proposal which struck me?the notion of "problem solving" in specific fields which is substituted for overall country programming and the more general idea of resource transfers of the past. I think the change in approach is a good one. It helps focus more attention on the critical areas which could improve the welfare of the majority of mankind, rather than on. GNP totals alone which, while important, have failed to reflect adequately the needs of the poor, in many developing countries. Furthermore, I know from personal experi- ence that a major international effort in a particular problem area can have dramatical- ly beneficial consequences. During the mid- 1900's, when I was serving as Secretary of Agriculture, widespread famine in the near future in major parts of Asia was seen as a real possibility. For many It appeared to be a certainty. A concerted effort by many in both the developed and the less developed nations, directly in the form of meat, milk and eggs. o however, resulted in the rapid development The agricultural reso and kee . PeniF port an average Nor sP let@ ?reagtaktatiY: tig415Meeave3akaitaffhblikti;idbiencgmnvearki North are near en five times those ler the average Indian, world, our own standard of living would suf- the Green Revolution. While the Green Revo- Nigezian or Colombian. fer. Clearly, therefore, it is in the self-inter- hrtion has obviously not been the final reean- l n eter ?f i June 20, 1973 . Approved For Release 2001/08/30: CIA-RDP75600380R000600170055-2 CONGRESSIONAL RECORD ? SENATE S 11575 swer to the world's food problems, it has enabled several Asian nations to achieve pre- viously undreamed of levels of grain produc- tion. It has been an essential means of buy- ing time with which to slow p'cvpulation growth and further develop agricultural po- tential. It is an impressive example of man's ability to confront successfully a problem of seemingly super-human proportions. Such dramatic breakthroughs may riot occur in all of the problem areas specified in the proposed legislation. Nevertheless, the focusing of energies and purpose on these key issues holds the promise of greater progress than the less concentrated approach of the past has yielded. ----- STATEMENT OF JAMES P. GRANT,* PRESIDENT, OVERSEAS DEVELOPMENT COUNCIL, BEFORE TIIE HOUSE FOREIGN AFFAIRS COMMITTEE, JUNE 12, 1973 Mr. Chairman and Members of the Com- mittee: I appreciate the invitation to testify before this Committee. The proposals made by a bipartisan majority of the Commit- tee for increasing the effectiveness of 'U.S. assistance to developing countries and to establish a new credit facility for expanding our exports to the one b4llion people who live in the lowest income countries of Asia, Africa, and Latin America are possibly the most far-reaching and important of any broadly supported Congressional initiative in this field since the launching of the Marshall Plan 25 years ago. I will address separately each of the four major proposals in the bill. NEW NAME AND TITLE Changing the title of the legislation to the Mutual Development Cooperation Act and the name of the administering agency to the Mutual Development and Cooperation Agency would make them reflect more accu- rately the true nature of the relationship now emerging between the United States and the developing countries. As detailed in the Over- seas Development Council's recent publica- tion The United States and the Developing World: Agenda for Action (February 1973), International politics and power relation- ships are changing, with security concerns giving way to economic issues among na- tions. This change will require the United States and other rich nations to pay greater attention to the needs and desires of many developing countries than ever before?for reasons of morality, self-interest, and the de- velopment of effective international insti- tutions, which we in the, United States in partciular require. Development can be a mutually beneficial process both for the low-income countries In need of outside resources and for the out- side countries supplying those resources. This is increasingly true as the world grows more interdpendent and as all countries rely more on international cooperative efforts to solve their problems" and to achieve their national goals. For example, improving the U.S. balance of payments and increasing do- mestic employment are two goals that de- pend on reform of the international trade and monetary systems; in both instances, co- operation by developing countries will im- prove the prospects for success. The ability, and willingness, of developing countries to cooperate in these areas is likely to be greater If they are making progress toward achieving their national development goals and we are assisting in the process. Similarly, our grow- ing need for relatively assured access to their raw materials frequently requires both im- provements in their infrastructure to per- mit physical access and their continued eco- nomic and social progress to maintain their political viability. "Mutual Development and Cooperation" may be a headline writer's nightmare, but it is a good shorthand way of describing a re- lationship in which the U.S. perceives a di- rect self-interest in the success of the de- velopment efforts of the low-income coun- tries. It is also a more suitable chargcteriza- tion of a style of administering development, assistance which looks to the developing country to take the lead in setting its own goals and planning development activities. REDIRECTION OF BILATERAL DEVELOPMENT ASSISTANCE The Committee members have taken a very ivmortant and constructive step in increas- ing and sharpening the focus of the now much diminished bilateral assistance pro- gram on acute problem areas, and in enaplia- sizing especially the importance of assisting developing countries in programs and proj- ects which will benefit the poorest majority oif the people in these countries and which will enable them to participate more effec- tively in the development process. The circumstances surrounding bilateral development assistance have changed dra- matically in the past 10 years. In the early 1960s, not only was bilateral development aid larger both in absolute amounts and in pur- chasing power, but it also was a much larger nge proportion of the total foreign excha available to low-income countries. Now, how- ever, the developing countries (exclud major oil exporters) have more than doub their earnings from exports of goods and serv- At aid ave to cial ater di- ices, to over $50 billion annually in 1972. the same time the private investment and flows from other developed countries h increased from approximately $4 billion over $11 billion, and multilateral finan institutions have assumed a much gre role in transferring resources. Thus the minished amount now available for bilateral development aid?some $1 billion?has a much diminished role both in transferring resources generally and in financing major capital projects. Over the same 10 years, the global develop- ment effort has had remarkable success in increasing the rate of growth in national product. During the 1960s, the developing countries average a 5.5 percent increase in GNP?a rate of growth unequalled by the rich countries at a comparable stage of their development. A number of developing coun- tries have experienced very substantial eco- nomic growth, attaining GNP growth rates of 10 per cent or even higher. Some low-income agricultural societies have been transformed into industrializing economies in amazingly short periods, and others are following suit.. Exports of manufactured goods have shown dynamism; for the developing countries as a whole, they have been increasing rapidly and now account for 23 per cent of their total world exports. Yet unemployment levels in many develop- ing countries are still increasing, some even exceeding those of our own Great Depres- sion; the income gap between the poorest half of the population and those well-off is actually widening; the bottom two-thirds of the population still have no meaningful ac- cess to health facilities; a majority of the rural population are illiterate; and urban settlements are mushrooming because of massive rural migration. In many areas, these problems become less manageable every day because population growth continues unre- strained. Finally, if the debt burden that has built up in a number of major, very low-in- come countries continues to accumulate, it will become insupportable. This situation has led some people to throw up their hands in *airste ir oth met in seeking to answer the question! "Where next with development assistance?" The global community now knows from the experience of the 1960s how to achieve in- creases in national product when it has the will to devote international and national resources to the task. However, to continue to measure development by GNP increases alone is to forget that, after all, the goal is human progress. Development must now be seen as encompassing the minimum human needs of man for food, health and educa- tion, and for a job which can give him both the means to acquire these basic needs as well as the psychological sense of participat- ing usefully in the world around him. Last February in New Delhi, a wise and perceptive Thai set forth the aspirations of Asian man as seen through his life cycle from the womb to the grave. His "Ode of a Developing Coun- try Man" (Annex A) is a most expressive description of the meaning of development. We need to develop ways of achieving this broadened concept of development as suc- cessfully as did the global community in ac- celerating growth in output over the past 10 years. Fortunately, experience in a number of poor countries during the past 10 .years of- fers some encouraging evidence that an ef- fective combination of domestic as well as international policies can simultaneously create new jobs, increase access to health and educational services, improve nutrition, re- duce income disparities, and check popula- tion growth. The possibility is best illustrated In East Asia, by countries with very different political and economic systems; namely, the experience of post-1960 China on one side of the ideological barrier, and the experience of South Korea, Taiwan, and the city-states of Hong Kong and Singapore on the other. Contrary to a common assumption of the 1950s and 1960s, the development record of these countries indicates that policies that enhance social equity need not deter overall economic growth?and that many such poli- 'cies can even speed it up. Thus, in the small- er East Asian countries just mentioned, growth rates over the past decade have aver- aged an impressive 10 per cent annually. But in addition, the income, health, and educa- tion of the bottom half of the population has Improved greatly, the disparity between the Income controlled by the upper and bottom 20 per cent of the population has been re- duced, birth rates have dropped sharply, and the dependence of these countries on foreign aid has either ended, or, as in South Korea, has been greatly reduced. All of these coun- tries have found a way to increase the ability of the average worker to participate effec- tively in the development process, thereby helping both the individual and his society. This has required not only favoring use of plentiful labor over scarce capital-intensive equipment, but also providing the incentives and merclianisms to encourage savings, es- tablishing or supporting institutions to give small farmers and entrepreneurs ready ac- cess to capital and technology, and ensuring the availability of rudimentary but mean- ingful educational and health services for virtually all. Through such policies, these countries have made social justice a major ally of growth. The acceleration of growth through full employment should not sur- prise us, as it not only means that more people have a stake in society, but that national output is increased by putting idle labor resources to work, and that scarce capital and foreign exchange are used more efficiently. Elsewhere, countries as different as Israel, Ceylon, and Yugoslavia have dealt effectively with some of the problems dis- cussed here? The views expressed in tlAs testim those of the witness, and d Prigat?44411446iMtuidts Mc-tte#BOOMEIR900,604117A065fi-2iscussionof represent those of the Overseas Development state that development is aggravating global these new policies is in Development Becon- Council, or others of its Directors, officers, or environmental and population problems. sidered, by Edgar Owens and Robert Shaw, staff. These are the real issues which must be D.C. Health (1072). Cl 3 1:1576 Approved For Release 2001/08/30 : CIA-RDP75600380R000600170055-2 CONGRESSIONAL RECORD ?SENATE June 20, 1973 There also is important new evidence that this Committee's initiative to address this Japan and the recently enlarged European le an increasing number of poor countries, range of problems in the rural sector of Community (including the U.K.). These ex- birth rates have dropped sharply despite China, when it authorized the Sino-Ameni- ports have been growing at about 10 per cent relatively low per capita income, and despite can Joint Commission on Rural Reconstruc- a year over the, past few years. Yet several the lack or relative newness of family plan- tion (with its unique collaborative style of 3 facts become apparent if one examines the iiing, programs. The common factor in these Chinese and 2 American Commissioners), and statistics on U.S. exports to those develop- countries of Latin America and Asia is that required earmarking of a certain proportion ing countries with the very lowest annual the majority of the population has shared of the funds for its use. I acted as the Coin- income?below $200 per capita?and as one in the economic and social benefits of signif- mission's Executive Secretary for its first year reviews the background analysis and de- icant national progress to a far greater de- on the mainland, and again later, briefly, in scriptive material released at the press con- gree than in most poor countries?or in most Taiwan. That early Congressional initiative ference on this bill: Western countries during their comparable contributed greatly to the subsequent unique First, total U.S. exports to the lowest period of development (see Annex B) . This combination of accelerated growth and great + income category of developing countries are evidence demonstates that appropriate poli- ly increased social justice in rural Taiwan, not expanding, but actually decreasing. With cies for snaking health, education, and jobs and I hope we will witness the establish- 'over 60 per cent of the population of the more broadly available to lower income ment of similar joint groups in Other coun- poor countries, this category now takes only groups in poor countries contribute signif- tries to which considerable discretionary au- 10 per cent of our exports to developing icantly. toward the motivation for slimily, thority can be delegated. countries. . families that is the prerequisite of a major COORDINATION - Second, other rich countries are expanding reduction in birth rates. It is becoming in- The current bill recognizes that the tic- their exports to these lowest income coun- creasingly clear that if the developing coun- tions taken by the United States in such tries along with expanding their aid to these tries are to escape the threat posed by rapid population growth within an acceptable time countries. fields as import policies, export promotion, Third, American exports to these countries protection, monetary policy, environmental frame, more families must acquire the met!- are heavily dependent on U.S. Government fi- protection, and a regime for the oceans may vation to limit births, not only be provided nancing, which is not increasing. with improved means to do so. be more important to some developing coun- tries than our actions on aid. rt rightly pro- Fourth, very little of the financing for the In the 1970s, developthent planners need lowest income countries, approximately $100 vides that whenever the United States formu- to give far more attention that heretofore million in 1972, comes from the Export-Im- lates policies on such subjects, the decision- to the effect of alternative development port Bank?most comes from AID. and PL making process should also take into account strategies on birth rates. Equally important, 480, which are decreasing. This contrasts the effects on the important U.S. interests the population crisis must be dealt with in sharply with the financing pattern for our in advancing the progress of low-income the broader context of the development countries, rapidly growing exports to the much less crisis?with more emphasis on the possible A mechanism for assuring efficient use of populous, more advanced developing coun- ways of treating the basic "disease" of tries for which the slightly concessional Ex- poverty, thereby creating the needed motiva- development is not in operation today de- Im terms are suitable, and where its loans Lion for smaller families. Combining policies and medium-term guarantees have increased spite the fact that President Nixon publicly that give special attention to improving the recognized in 1971 the need for better co- to over $2.5 billion in 1972. well-being of the poor majority of the popu- ordination, with particular reference to the Many U.S. exporters believe that a major lation and policies that provide large-scale, different U.S. entities involved in the aid factor behind our poor performance in these well-executed family planning programs process through bilateral, international, and markets is the shortage of financing avail- should make it posaible to stabilize popula- multilateral mechanisms. AID., the U.S. able on sufficiently concessional terms. Hence tion in developing countries much faster than agency with the greatest expertise in the do- the idea of a Fund to make credits available reliance on either approach alone.2 ? veloprnent process, is not even a member of to these markets at more attractive terms It is no accident that most of the non- the President's Council on International Eco- appears sound, Nevertheless, a number of socialist "development successes" have taken nomic Policy or of the National Advisory questions about the proposed Fund need to place in societies with broad access to varying Council chaired by the Treasury. be answered. combinations of trade, investment, and aid. The need for better coordination was 1. Where is the line between export credits Nor is it an accident that the major innova- identified by Edwin Martin, Chairman of and development loans? There is no easy tions introduced through development co- the Development Assistance Committee of answer to this question, other than the in- operation have resulted primarily from U.S. the Organization for Economic Cooperation tention of the lender. It is olear, however, assistance programs?private and public? and Development, in his most recent report. that large-scale export promotion to the low- which explicitly concentrated on particular Ambassador Martin points out that in many est income countries requires a substantial functional areas. These innovations include donor countries, the development assistance concessional component, which is not pres- the programs such as comprehensive rural. agency that is most knowledgeable about de- ently available for American exporters. development in Korea and, in particular, velopment matters is not represented in such Taiwan; the "Green Revolution:" the ex- There is a modest subsidy component in policy decisions?and often is not even di- traorclinary spread of public health measures Export-Import loans, which are usually at racily involved in all aid decisions. He called as exemplified by malaria eradication; and a rate lower than that at which Ex-Im Bank upon governments to correct this anomaly. Ilse acceptance of the need for large-scale borrows on the market, with the interest The coordination proposals in this bill family planning programs. differential being made up from other in- should meet this need to increase the effec- come available to Ex-Im Bank. There ob- Tile bilateral development aid requested by tiveness of -U.S. policy decisions E1, n d ex- the Administration and supported by the penditures in this important field, viously is a large concessional element in the typical IDA loan, and a still large but some- proposed bill is a relative drop in the bucket EXPORT DEVELOPMENT CREDIT FUND what smaller element in A.I.D.'s concessions," when contrasted with the total needs of the oeveloping countried (excluding major oil ex- The bill establishes an Export Develop- loans, which are on harder terms.' porters) for more than $70 billion of foreign ment Credit Fund to make credits available In the United States, Ex-lin Bank loans to exchange. However, if bilateral assistance is for financing U.S. exports having a develop- developing countries have increasingly begun looked at as a 'weapon to be targeted pri- mental value to countries in the lowest in- to resemble development finance as the Bank manly on the critical specific problems of conic brackets. The Fund could mean a has extended repayment periods rind followed development (and. particularly on helping major breakthrough for American exports flexible rules. For instance, direct loans by the poor majority to participate more of- to a potentially major market and should Ex-Im Bank in FY 1970 for conventional fectively in the development process), this also prove useful to the lowest income coun- electrical equipment had maturities ranging amount can be of great significance. Fred- tries. Quite apart from our long neglect of from 51/2 years to 16, with a median of about dent Nixon in his May 3 report on the State China, the United States in recent years has 10. At the same time, A.I.D. development 11- of the World, and Ain. in its Congressional increasingly neglected the future market nancing has begun increasingly to incorpo- presentation have both recognized the need potential of the poorest billion people liv- rate elernents from export credits, e.g. to for such a greater focus. The proposal now ing elsewhere in the developing world. The shift from untied to tied procurement, from before the Committee will ensure that this Fund can help to correct this neglect by pro- largely grants to mostly loans, and from shift takes place more rapidly, and more ex- viding financing which is competitive with highly concessional loans to credits on in- tensively than otherwise might be the case, that of other industrial nations and which creasingly hard terms. Other industrial coun- t might add that my personal involvement also increases funds for financing our ex- tries?such as Canada, Germany, Japan, and ports?thereby creating markets for the ins- France promote exports to lowest income with these hard-core development problems began seine 25 years ago as the result of mediate future and for follow-on orders, as countries by blending a "cocktail" for in- well as helping build stronger economies that dividual transactions, using their public aid can develop into better customers for U.S. funds in combination with commercial term See Smaller Families Through Social and goods over the long run, funds so as to bring about modifications in Economic Progress, by William Rich, Mono- 'U.S. exports to less developed countries the terms and conditions of commercial graph No. 7' Overseas 1141701MtdcParReltage?21304/08/130* Pe PAIRDP 7/MBOONCOR00060131370055.12ce the rate ef (1973). nearly the same as our combined exports to interest. June 20, 1973 Approved For Release 2001/08/30 : CIA-RDP75600380R000600170055-2 CONGRESSIONAL RECORD ? SENATE. S 11577 A recent study 3 examining the interaction between development finance and export credits notes: "Unlike other donor countries, the U.S. government has sought to maintain a fairly rigid line between its foreign aid program and the activities of the Export-Import Bank of the United States. The line is based less on a clear distinction between what the two agencies actually do than on their stated motivations. What Eximbank does is labeled export credit, because the mission of that agency is to promote exports, despite the fact that Eximbank has been making long-term direct, loans to developing countries (among others) for a longer time than any other de- velopment finance or national export credit agency. What TJSAID and the World Bank do is called development finance, or foreign aid, because here the motivation is to be bankers of the poor. Yet the loans of these agencies finance exports too, and, as far as the World Bank is concerned, often on terms comparable to those of the national export credit agencies." It is clear from the text of the proposal that the Export Development Credit Fund is designed to increase U.S. exports that have a developmental character to the populous lowest-income countries. In addition, these credits should help to strengthen the econ- omies of these countries, thus bringing a bet- ter life to their people, increasing their ability to meet these future obligations, and assisting them to become increasingly bet- ter markets for U.S. industry. 2. Would the availability of credit on softer terms actually increase U.S. exports? Or might it merely displace existing financing? Nobody can be certain what will happen in this inexact science, but the bulk of the credit used from this Fund should result in additional exports. We do know that the vast bulk of financing for the market represented by countries with annual per capita GNPs under $200 now comes from PL 480 and AID. loans and grants. Since the Fund is not in- tended for financing exports of agricultural surpluses, there should be no effect on PL 480. Since A.I.D. loans and grants will be made available on terms generally better than those of the Fund, and since most of the developing countries need more rather than less concessional terms, A.I.D. financing should not be displaced unless the U.S. Gov- ernment chooses?as a matter of deliberate policy?to withdraw them and substitute Fund credits. It is possible that the $116 million loaned in the most recent year by the Export-Import Bank would be displaced by the Fund, but if so, it would again be a mat- ter of deliberate U.S. governmental decision. Given the heavy debt burden some of the poorest countries carry, it might be good if the softer terms of the Fund were substituted for the harder terms of the Export-Import Bank: in any case, a small amount of exports Is involved. There is no way of knowing whether the rather small amount of private financing (about $250 million) might be dis- placed by Fund credits. To the extent this financing covers sales from parent companies to subordinates, it probably would not be affected. Likewise, exports financed by private equity capital probably would not be affected. My own guess is that the residue of private loan financing that might be displaced by the Fund would be very small indeed. Is the poor performance of U.S. exports to these markets relative to others due to un- competitive financing?or to other causes? Clearly the overvaluation of the dollar until recently was is contributory factor, but it "The Bankers of the Rich and. the Bank- ers of the Poor: The Role of Export Credit in Development Finance," by Nathaniel Mc- 5. Is this moving in the direction of tying Fritteriek and B. Jenkins miApprovettcForfkletritieng tf,08/?2?. Bcp3Sii g (1972). stitution of existing aid, but is financing for tamn. commodities and certain destinations must be remembered' that this factor did not prevent our exports to the more advanced de- veloping countries from rising rapidly. An other factor has been that the tied aid of other countries to these lowest-income coun- tries has been rising while ours has been falling. Although we do not have comprehen- sive statistics, there is a great deal of mate- rial in the form of known cases of bids lost because of lack of competitive financing. U.S. exporters with whom I have talked in recent - weeks believe that the lack of suitable financ- ing is a very important factor in the situa- tion. Many of them point out that exports are often lost because Americans do not bother to bid?believing that they cannot win because of inadequately competitive fi n ancing. tWhatever the history and causes of our poor export performance to this category of Countries, I think there are two reasons to expect that more attractive financing would help. First, if a line of credit were extended by the Fund to the government of country A for a particular purpose, such as imports of electrical equipment or heavy construction equipment, that government would have an incentive to make sure that American ex- porters were given a fair opportunity to com- pete for business. Otherwise, country A would fail to make use of a valuable resource, and in due course the line of credit would be withdrawn. Second, and much more critical, once it became known that there was a sub- stantial line of credit available to country A for imports from the United States, there would be an incentive for U.S. exporters to pay more attention to that market. If this were to happen, some dramatic changes prob- ably would take place. U.S. exporters might be encouraged to send representatives to importing countries or to arrange, where war- ranted, .f or a local resident representative to insure that they are notified of tenders to bid, to secure copies of specifications for them, and to represent their interests in general. These basic preliminary steps can be very important in increasing U.S. exports on commercial terms to a particular market on a long-run basis. Now that there has been a substantial de- valuation of the dollar, and that U.S. price indices are trending upward at a slower pace than those of our competitors, there is every reason to expect that American goods will be able to compete on price and quality for these markets. This is precisely the right time for U.S. Government action to make sure that U.S. exports can compete on fi- nancing terms as well. I .hope that the Fund would be admin- istered in such a way as to correct more than the deficiency in U.S. financial competitive- ness. It should also aim to help provide U.S. business with timely information and en- couragement to seek sales in these markets, and it should analyze other obstacles to U.S. exports and make appropriate recommenda- tions as to how they can be removed. 3. Will this create U.S. jobs? The Export- Import Bank has done some calculations which show that each additional $12,600 of exports creates one U.S. job. At that rate, if the Fund were to stimulate $1 billion of exports each year, some 80,000 additional jobs would be created. 4. Is this an unwarranted subsidy of U.S. business? It need not be, if properly admin- istered. One object is to make U.S. exports competitive in financing terms. But they must still meet the competition from Europe and Japan an price and quality. And there is plenty of competition. In addition, it might prove useful for the Fund to provide a price test prohibiting any exported under Fund financing from charging more for his exports than for his domestic sales, export promotion. Insofar as bilateral aid to be administered by MDCA is concerned, that IS already largely tied and this does nothing to tie it further. 6. Since developing countries are already saddled with a heavy debt burden, will lend- ing 'them more increase Vied- problems? Of course, compared with a grant, any loan is hard. As a supporter of development, I hope that an increasing flow of grant funds will be made available. But It is not reasonable to suppose that all low-income country un- ports could be financed with grants. Some must be paid for with cash (the hardest m for of import), 'and some with commercial loans and investments. The Fund would add a new dimension between grants and com- mercial credits. Assuming the imports it fi- nances are of the developmental character required in the bill and are used productive- ly, they should improve the ability of the importing country to manage its debt bur- den. In this connection, the question has been raised whether these loans will ever be re- paid. Our experience with the developing countries is that they do repay their loans. Occasionally they get into financial trouble and have to ask for debt relief. But they do not normally default on loans. Since the Fund will be extending credit on terms that the borrowers can more easily afford to pay, and for goods and services which strengthen the borrowers' economies, there should be fewer problems of need for debt relief than would be the case if these credits were not available or if they were only available on harder terms. 7. Will Fund-financed exports help de- velopment? This is a critical question, since not all imports do help development. Tho proposed bill sensibly provides that the Fund may only be used to finance goods that do advance development. Stating that policy may be as far as the law should go, but in administering the Fund, care would be re- quired to prevent low-utility exports from being financed. I believe that the Fund should have a flexible commodity eligibility test, designed to make certain that its ex- ports-support development in the importing country. Beyond that, there may be good reason for the Fund to verify that the im- port and investment policies of the import- ing country are such that Fund-financed ex- ports to that country have a reasonable pros- pect of being constructively used. Such tests should not lessen the Fund's usefulness as a promoter of U.S. exports, since the range of U.S. goods and services helpful to develop- ment is very broad and can range from capital goals to individual raw materials, fer- tilizer, and food. In order to take these development con- siderations into account, the Fund should have some expertise in the development busi- ness. In that connection, the Advisory Com- mittee established by the proposed bill should prove valuable, for wherever the President might locate the Fund adminis- tratively, the Committee. would ensure that the extensive development experience ac- cumulated by the U.S. Government was brought to bear on its decisions. The PI, 480 Inter-agency Committee has proven ex- tremely valuable for this purpose with respect to agricultural commodities. Despite the need for assessment of the de- velopmental impact of the U.S. goods and services financed, the Fund should resist the temptation to try to tell the importing coun- try how to run its. internal affairs. For de- veloping countries increasingly are evolving ways of protecting themselves from. wasteful and harmful investment decisions. In any case, the functions of the Fund could be jeopardized by overly zealous application of rigid development criteria rican ships? Development Council Monograph No. C in ai -giving is is ne t eigiltbarMiM e ? OUTIVO, hips for cer- S 11578 Approved For Release 2001/08/30: CIA-RDP75600380R000600170055-2 CONGRESSIONAL RECORD - SENATE June 20, 1973 may make U.S. exports sharply more expen- sive than they would otherwise be. To pre- vent our exports from thus becoming uncom- petitive, I propose that the bill be amended to permit the Fund to use aid receipts to pay for the difference between the cost of U.S. ships and other cheaper ships, whenever that difference is a serious problem. 9. Which countries should be eligible? The bill provides that lowest-income countries with less than $200 per capita annual GNP are to be the main recipients of Fund credits, but avoids making per capita GNP a rigid test of eligibility. Although per capita GNP Is the best measure we have of poverty, it is not a perfect measure. Nor does it measure Precisely the relative ability of countries to borrow on commercial terms or to serviefe debt. Finally, it does not measure accurately the countries where U.S. exports are having particular difficulty. For those reasons, the record on the legislation should make clear the Congressional intent that the Fund be administered flexibly to take account of all relevant factors, including ability to pay, poverty, and the need for a subsidy to sup- port U.S. exports. CONCLUSION Finally, Mr. Chairman, I would like to ex- press my support for this work of the major- ity of the members of your Committee. Their labors have produced. a bill which is a vast improvement in substance over present legis- lation-and which warrants, and I believe will attract, the support of important seg- ments of the U.S. public. In my view, their initiative is, in the words of Congressman Zablocki in introducing this bill on May 30, ". . in the best tradition of Congressional lawmaking. It embodies a bipartisan consen- sus on how future foreign aid programs should be structured." ANNEX A: ODE OF A DEVELOPING COUNTRY MAN (As told by an Asian humanist to James Grant) While in my mother's womb, I want her to have good nutrition and access to maternal and child welfare care. I don't want to have as many brothers and sisters as my parents had before me, and I do not want my mother to have a child too soon after me. I want good nutrition for my mother and for me in my first two to three years when my capacity for future mental and physical development is determined. I want to be able to go to school, together with my sister, and to learn a usable trade, and to have the school impart social values to me. When I leave school I want a job, a mean- ingful one in which I can feel the satisfac- tion of making a contribution. I want to enjoy good health; .for this to be possible I need access to low-cost, readily available drugs and medical services, and I expect my government to provide free pre- ventive health services. I want to live in a law and order society, without molestation. I want my country to relate effectively and equitably to the outside world so that I can have access to the intellectual and technical knowledge of all mankind, as well as to cap- ital from overseas. I would like my country to get a fair price for the products that I and my fellow citizens create. As a farmer, I would like to have my own plot of land, with a system which gives me easy access to credit, Co new agricultural technology, and to markets, and a fair price for my produce. As a worker, I would want to have some share, sonic sense of participation, in the factory in which I work. As a human being, I would like inexpensive newspapers and paperback books, plus access to radio and TV. I need some leisure time for myself, and to enjoy my family, and want access to some green parks, and to the arts, and my cultural heritage. I would like to have the security of coop- erative mechanisms in which I join with others to do things which we cannot do alone. I want clean air to breathe and clean water to drink. I need the opportunity to participate in the society around me, and to be able to help shape the decisions of the economic and social as well as the political institutions that so affect my life. I want my wife to have equal opportunity with me, and I want both of us to have access to the knowledge and means of family planning. In my old age, it would be nice to have some form of social security to which I have contributed, but best of all would be to have my children able and desirous of providing for me. These are the fundamentals of life, and what development should seek to achieve for all. ANNEX B FERTILITY LEVELS AND SOCIAL INDICATORS FOR DEVELOPING COUNTRIES, 1970 Crude birth rate (birth/thousand) 1970 1960 Per capita Percent GNP ' literacy Death rate Infant Life mortality expectancy (1,000 births) Extent of family planning programs percent Argentina 21 Barbados 21 Singapore 022 t.1 ruguay 22 ;Trinidad-Tobago 23 Taiwan 3 27 Chile 28 Cuba 29 Sri Lanka a 29 South Korea 029 Costa Rica 33 Jamaica 36 Brazil 937 Guyana 37 Egypt 537 India 3 38 Malaysia.. 038 Turkey . a 39 Venezuela 41 Mexico 042 Thailand 3 42 Colombia 42-44 Paraguay 943 Peru 943 Pakistan ? 0 43 Bolivia.. 44 Ecuador 44 Philippines 244 Ft Salvador 9 44 Indonesia 545 Dominican Republic . 2 48 Morocco 3 49 Honduras 49-51 Kenya 3 51 _ . . 23.0 30. 0 35. 6 24. 0 40. 0 1 37.1 35.0 32.0 6 35.1 939. 3 48. 0 42. 0 40. 0 42. 9 5 49. 3 O 44. 2 u41. 1 5 41. 0 46. 0 45. 0 a 44. 2 46. 0 41.0 46, 0 5 51, 3 44. 0 47.0 6 46. 6 50.0 5 46. 6 49.0 O 50, 1 49. 0 5 47.0 1 Income distribution in Argentina is better, and in Venezuela worse, than the average for Latin America; in Venezuela the poorer half of the population receives a smaller proportion 00 10101 income than any other country of the region. ECLA, Income Distribution in Latin America (U.N. Publication Sales No. 6.71. 11. 0.2), pp. 41-61. Accumulated acceptors as a percentage of women of fertile ago. 1971 data. Average of male and female lifo expectancies, 1951-69. Average 186065 data. o Acceptors as a percentage of married women, 15-44 yrs, in 1972, 7 Users as a percentage of married women, 15-44 yrs, in 1972. o 1968 data. 1970 estimate. Approved For Re ease 2001/08/30 10 Acceptors as a percentage of married women, 15-94 yrs, in Iva, II Users as a percentage of married women, 15-44 yrs, in 1971, '1,068 523(1969) 960 833 890 373 854 280 169 258 539 630 394 6 330 200 96 355 257 1931 670 174 320 246 448 150 203 267 266 294 105 356 211 267 141 91 92 75 91 89 85 84 94 75 71 84 82 67 80 26 28 43 46 76 76 68 73 74 61 16 40 68 72 49 43 65 14 45 20-25 8 38 5 9 6 05 9 7 8 2 10 7 67 99 7 17 3 16 o 10 O 13 7 99 09 10 6 10 9 12 16 19 11 3 10 o 10 18 '14 16 17 17 67 4 65 68 69 66 68 61 69 62 58 65 65 64 61 53 50 63 54 67 61 56 60 58 54 51 Si 52 55 58 48 58 51 49 48 56 42 621 54 37 18 92 a 41 50 00 60 32 94 43 a 120 2 128 O 75 119 46 66 3 68 76 67 62 132 108 80 378 63 135 72 5 149 136 115 2 0. 6 6 64. 0 01.9 2 19.6 7 5, 0 2 11.3 0.9 7 30. 0 2 17. 4 3. 3 11.1 0 13. 0 7 13.2 6 13.0 10 9. 2 6. 2 2 1. 0 15.7 a 4. 1 22. 3 2 . 2 NA 2 1.8 7 8,1 10.5 10 .8 19 6.8 7 4.0 2 5. 9 u 2.2 Sources: AID Economic Data Book, Latin America, Oct. 5, 1972. Selected Economic Data for the Less Developed Countries, AID ,June 1972. Population Program Assistance, AID, December 1971, p. 210. 1972 World Population Data Sheet, Population Reference Bureau, Inc., Population table 19. Statistical Yearbook 1971, United Nations, p. 76. Data on percentages of accumulated acceptors are from Benjamin Vie!, M.D., "Family Planning in Latin America: The Past, Present, and Future Role oil PFF,' n.d., p. 8, prepared for the International Planned Parenthood; Federa- tion, Western Hemisphere Region, Inc. United Nations Population Division, Working Paper No. 38, "Estimates of Crude Birth Rates, Crude Death Rates, and Expectations of Life at Birth, Regions and Countries, 1950-65," February 1971. Agency for International Development, "Population Program Assistance, Aid to Developing Countries by the United States, Other Nations, and Inter- national and Private Agencies," forthcoming (1972) issue. Dorothy Nortman, ''Population and phipMigebnippso58tripkyobottiogrlood8isiLF2mily Planning, Po pill at i on how, 20, 1973 Approved For Release 2001/08/30: CIA-RDP75600380R000600170055-2 CONGRESSIONAL RECORD ? SENATE S 11579 Hon. Tuomns E. MoReax, Chairman, House Foreign Affairs Cominittee, U.S. House of Representatives, Washing- ton, D .0 . DEAR MR. CHAIRMAN: I regret that I SIm not able to appear before your Committee to testify in person on the encouraging initia- tive taken by a majority of the members to improve the effectiveness of U.S. support .for !he development of low-income countries. Nevertheless, I do wish to associate myself with this endeavor and give it my strong endorsement. welcome the emphasis on the human problems of the poorest majority of people living in the developing countries. From my association with the Rockefeller Foundation and the Pearson Commission I can attest to the value of U.S. support for efforts to fight disease, malnutrition, overpopulation and ignorance. These are the most pervasive problems of the developing countries, and the Congressmen wisely emphasize their de- sire to direct U.S. programs at them. I also support the effort to assure that the U.S. Government consider the total impact of all its decisions that affect the developing countries. The economic and political power of this country is so great that many of our actions in trade, monetary and investment policies, or our proposals for the regime of the seas or in the international environment do have an important effect on the develop- ling countries. Given our interest in sup- porting their development, it is well to de- velop a better procedure for taking into ac- count the totality of those effects. Finally, I strongly favor the imaginative proposal to create the Export Development Credit Fund. The United States is falling behind other industrialized countries in ex- ports to the lowest income countries and steps should be taken immediately to remedy this decline. I personally believe that many. U.S. exporters can improve their perform- ance in this market. Clearly other countries believe that the poor countries have a mar- ket well worth pursuing and have developed their policies accordingly. We should do like- wise. I find particularly appropriate the proposal for financing the interest differential between what is borrowed and what is loaned from repayments on old aid loans. That innova- tion makes it perfectly feasible to finance these export credits from public debt au- thority. I recall that in 1957 the Administra- tion submitted to the Congress a proposal for public debt authority to finance the De- velopment Loan Fund, It was passed by the Senate and the House Foreign Affairs Com- inittee but failed on the floor of the House. The weakness with that proposal was that annual appropriations would have been re- quired in increasing amounts to cover the differences between the interest the DLF paid and what. it charged its borrowers. Now, however, with receipts from previous DLF and other loans coming in, there will be ample funds to meet the costs and make the Fund financially viable without recourse to annual appropriations of new funds. Since we use borrowing authority and investment icome to finance exports to Europe, Japan and the more developed low-income coun- tries such as Brazil and Taiwan at slightly subsidized rates, it only makes sense to use a similar authority to finance exports to the poorer countries as well, but-at more conces- sional rates. Otherwise, U.S. exports to those areas will continue to decline. As a conse- quence, the welfare of American workers also will suffer-'?and the poorest countries will be deprived of American goods and services they can fruitfully use to advance their develop- However, any such objections are met by the injunction in the proposal that these credits be used for goods and services Of a developmental character so that over the extended period of repayment the credits will more than increase the ability of recipients to meet these obligation. Properly adminis- tered, there is no reason the Fund cannot improve American exports and at the same time significantly promote the development of the low-income countries, In closing, I would like to say how im- pressed I am with this farsighted initiative which reflects the realities of the future rather than the outworn dogmas of the past. Sincerely, non. THOMAS E. MORGAN, Chairman, House Foreign Affairs Committee, U.S. House of Representatives, Washing- ton? D.C. DEAR MR. CHAIRMAN: When I learned of the initiative by a bipartisan majority of your' Committee on the foreign aid bill, I was most encouraged and wanted to testify in person. Regrettably; previous commitments prevent that. But I believe this letter will record my vigorous support, particularly of two features of the proposal. First, I believe that it is important that the now reduced American bilateral development aid program concentrate on priority areas in which we have, or can develop, a special ex- pertise, and particularly on those problems so basic to the broad modernization of the developing countries, including food produc- tion, rural development, education, health, and family planning. Such programs should help a larger proportion of the people in these countries participate more effectively in the development process. The Committee's ap- proach commendably gives sharp priority to these fields and actually authorizes funds ac- cording to those categories. Second, I applaud the proposed Export De- velopment Credit Fund. U.S. exports to the lowest income countries with a population of apparently one billion people are doing poor- ly, in part because these countries, lack for- eign exchange but also because financing on terms that meet our competition is not avail- able. On price and quality I think our ex- ports would do well now and better in the future, provided financing is available on favorable terms. The proposal to finance this Fund with borrowing authority would have been more debatable ten years ago. However, there now is available from repayments and interest on existing aid loans a growing stream of funds that can be used to cover the difference be- tween the interest the Fund must pay on its borrowings and the lower rate of' Interest it will receive on its credits. If that differ- ence had to be met from annual appropria- tions I would have doubts; but given the availability of receipts from earlier loans, I believe public debt authority is a sound pro- cedure. It is interesting to note that this same use of borrowing authority and payments on earlier aid loans was recommended by the Peterson Task Force in 1970. In much the same manner the Export-Import Bank sub- sidizes interest on its loans from its invest- ment income. I am concerned, however, that the defini- tion of "lowest income countries" not be so Interpreted as to exclude the poorest coun- tries in Latin America. I am particularly anxious that countries such as Bolivia, Para- guay, Haiti, and Honduras be eligible at this time for credits on concessional terms since they have difficulty meeting with normal The Committee may find some who will. conunercial terms. DOUGLAS DILLON. JUNE 11, 1973. members of the House Foreign Affairs Com- mittee are to be commented for their crea- tivity and foresight in proposing a mecha- nism which can simultaneously contribute to our need for significantly increased exports and to help accelerate the development of the lowest income countries. I also applaud the Committee's desire to have an improved system of coordination for United States policies and programs which affect our interests in the development of the low income countries. This need for improved coordination has been noted in the past and still remains largely unmet. This principle is a commendable one at a time when we must consider the totality of U.S. actions affecting the developing countries, Sincerely, DAVID ROCKEFELLER- [From the ChristianSe3ie Ince Monitor, June 8, 1n REDIRECTING FOREIGN AID TO POOREST OF TIIE POOR (By Harry B. Ellis) Wastinvorox.?Getting United States for- eign aid down to the poorest people in the poorest countries is the thrust of a sweeping new proposal by key congressmen. Growth rates of developing nations of ten are impressive, the sponsors point out. But generally, within those same countries, the income gap between rich and poor steadily widens. The existing structure of U.S. foreign aid. experts agree, does little to help millions of Asians, Africans, and Latin Americans mired in the deepest poverty. A proposal by a majority of the House Foreign Affairs Committee would revamp United States bilateral foreign aid by zero- ing in. on the root problems?nutrition, health, education, population control, rural development?linked with poverty. Their bill, introduced as amendments to the Foreign Assistance Act, would not cost American taxpayers more money, but it Would redirect the flow of U.S. aid. ? IN LINE WITH NIXON The bipartisan sponsors, numbering at least 26 of the committee's 40 members, stress that their recommendations are in line with President Nixon's own suggestion, voiced in his "state of the world" message of May 3, that aid should move in this direc- tion. The new House proposal agrees with the Nixon administration's foreign assistance bill, now before Congress, that $1 billion should be allocated to bilateral economic aid in fiscal year 1974, beginning July 1. This $1 billion is apart from military as- sistance proposed by the 'White House. Also separate is the administration's request for $600 million for reconstruction work in Southeast Asia. Sponsors of the House measure, headed by Clement J. Zablocki (D) of Wisconsin, do not seek changes in military aid or the Southeast Asia funds, but would channel the $1 billion of economic help into proj- ects for the very poor. These are defined as "food, rural develop- ment, and nutrition; population growth and health; and education and human resources development." "Projects," says a statement by the House sponsors, "would be selected which most directly benefit the poorest majority of the people in these countries. . . . "We are learning," the statement adds, "that if the poorest majority con participate in development by having productive work and access to basic education, health care, and adequate diets, then increased economic object to the proposal on t prowadifor Ratleaved20 01 /08#303,:. MIRbl3PrpOrga0 Wag& irttitY5gT2 gohand in creating the Fund would increase the already trument for American expo eoo heavy debt burden of the poorest countries, competitive in this neglected market. The Experience shows that spurts of economic Approved For Release 2001/08/30 : C1A-RDP75600380R000600170055-2 11580 CONGRESSIONAL RECORD ? SENATE growth in developing lands, spurred by in- jections of foreign aid, often enrich a rela- tively small class of people, but do not "trickle down" to the very poor. The way that social and economic power Is shared in many Asian, African, and Latin American countries, experts concur, pre- vents newly developed wealth from being shared fairly between the urban elite and the rural poor. PROJECTS AIMED AT POOR Countless millions of the latter, Hi the words of Robert S. McNamara, president of the World Bank, "lie beyond the reach of traditional market forces and present public services." How to reach them? Neither the Worla- Bank, nor the United States Government, nor any other donor, can order a power elite in a developing land to change its way of doing business. But a beginning can be made, note the House sponsors, if economic aid is aimed specifically at projects directly benefiting the poor. The problem of equity, or making the "trickle down" work, now is universally re- garded as a challenge facing every indus- trialized nation, or agency, giving aid to backward lands. Mr. McNamara, sketching the world at the end of this century, foresees affluent West- ern countries enjoying average incomes per person in the range of $8,000, while some 2.5 billion people in the developing world may receive less than $200 each, and 80 million of these less than $100. So there is a double gap?between rich and poor nations, and, within the poor lands, be- tween the power elite and the rural majority. In an effort to keep the rich-poor nation ? chasm from widening, the United Nations established as a reasonable principle that rich countries should give to poor ones 0.7 percent of their gross national product (GNP) . Collectively, Mr. McNamara told the an- nual meeting of the World Bank in Washing- ton last year, affluent nations are falling far short of that standard, giving, on average, only half of 0.7 percent. The United States, whose aid as a per- centage of GNP has declined steadily in re- ' cent years, does even worse. By 1975, at the present rate, said Mr. McNamara, the U.S. is expected to share only 0.24 percent of its GNP with developing nations, [From the Christian Science Monitor, June 12, 19731 EASIER CREDIL TERMS PROPOSED: UNITED STATES :EYES EXPORTS TO POOR LANDS (By Harry B. Ellis) WASHINGTON.?Last year the United States exported $16.3 billion worth Of goods to de- veloping countries, almost as much as the U.S. sold to Japan and the enlarged Common Market combined. Poor countries, in other words, now buy about as much from the United States as 10 of the world's richest lands together do. But there is a curious skew to these sales to the "third world," according to a majority of members of the House Foreign Affairs Committee, who hope to revamp the U.S. foreign aid program. Sales of American goods to the "richer' developing lands, those with per capita an- nual incomes above $200, indeed are growing. But exports to the poorest countries, those with incomes below $200, are shrinking. A major reason is financing. Tho more affluent developing countries, like Mexico, Brazil, Korea, and Taiwan, can afford to bor- row money to pay for the Export-Import Ban BANK TERMS TOO STEEP? ? The poorest lands, Including India, Pakis-, es r.c111,,+. nfrorel standard Eximbank terms. "In many cases," states the House committee panel, "lack of financing on competitive terms, rather than price or quality, explains the U.S. inability to compete for this Market." Meanwhile, exports by Japan, Canada, West Germany, Britain, and some other Western lands to developing countries grow faster than those of the U.S., again partly because of financing. Other nations, notes the House study, often make it easy for poor countries to borrow money. Trade flows in the wake of this bor- rowing., "This market of about 1 billion people (low income countries, excluding Commu- nist areas), whose gross national product has been increasing approximately 5 percent an- nually, is important at present and promises to grow more important in the future. NEW AGENCY PROPOSED "Europe. and Japan," continues the House committee report, "apparently believe this and offer vigorous and steadily increasing government financing programs which help develop their markets in these countries. , "If the United States wants to avoid fur- ther losses and perhaps increase its share In this market, there will have to be In- creased government financing on terms that compete." At least 26 of the 40 members of the House Foreign Affair Committee believe this should be done through the creation of a new agency, the Export Development Credit Fund. These congressmen, including Clement J. Zablocki (D) of Wisconsin and several other Midwesterners, have introduced a bill to this end. Their measure is offered in the form of amendments to the Foreign Assistance Act. In addition to creating the new credit agency, the amending bill would focus $1 billion of U.S. economic aid, requested by President Nixon for fiscal year 1974, on the projects helping the poorest people in the poorest lands. ABOUT 130,000 NEW JOBS? The proposed credit agency would, in the view of its sponsors, "kill several birds with one stone" by enabling U.S. exporters to compete in the poorest lands and extending credit that the latter could afford. One result, the sponsors believe, would be the creation of "an estimated 80,000 new U.S. jobs," through expansion of American exports. The fund, which would operate at a level of about $1 billion yearly, would, like the Export-Import Bank, be authorized to borrow from the U.S. Treasury or the public.. This money would be borrowed by the fund at market interest rates. The fund then would finance U.S. exports to the poorest countries on competitive terms, perhaps 30 years' maturity at 3 percent interest, with 10 years of grace. The gap between the fund's soft-term loans and its harder term borrowing would be covered by repayments of past foreign aid loans now flowing 'Into the Treasury. NUUNCET ACCESS WIDER American taxpayers would not be shoulder- ing an additional burden. U.S. businessmen would have access to wider markets and, in the process, new jobs would be created in the United States. Over a period of time, according to the bi- partisan proponents of the measure, aid- recipient nations, as their economies grew, would tend to increase their purchases of American industrial goods. ? The sponsors point to Taiwan as an exam- ple. In 1960, they note, U.S. exports to that Island nation totaled $100 million, DO ,per- cent of which were U.S. aid-financed. Last elease020134/00130 DalkdaDR17l51300 million worth of goods to Taiwan, very little of which was financed by U.S. credits on concessional terms. 791,1 rwoonsori nose': Its nnonsorm June 20, 1973 suggest, might be administered by the Ex- port-Import Bank, by the Department of Commerce, or independently. An inter- agency advisory committee would oversee its operations. PROPOSALS IN TIIE 'TOPPER Separately the committee majority pro- poses to change the name of the existing Foreign Assistance Act to "the Mutual De- velopment Act," administered by the Mutual Development and Cooperation Agency. All these proposals now go into the con- gressional hopper, along with President Nixon's request for $1 billion in economic aid, $600 million for reconstruction work in- Southeast Asia, and $1.31 billion for military assistance. The last two figures are not affected by the proposals emanating from the House Foreign Affairs Committee, which concen- trates on the agreed figure of $1 billion for bilateral economic aid. The committee sponsors want to see that $1 billion redirected to help the poorest Asian, Africans, and Latin Americans, and supplemented by a soft-loan credit agency. [From the New York Times, June 5, 1973] OVERHAULING AID Committees in both houses of Congress have moved in recent weeks to revise dras- tically President Nixon's foreign assistance program, which Chairman J. W. Fulbright of the Senate Foreign Relations Committee has already dismissed as "a relic of the past." It is not that the $2.9-billion aid request is extravagant In terms either of this coun- try's ability to pay or the needs of the less- developed nations. Even in the improbable event that the portion of the over-all aid budget allocated to economic assistance? $1.6 billion?were fully funded, it would represent a slippage in this country's al- ready low position among donor nations in aid as a percentage of gross national product. One basic trouble with the President's aid package is that it remains heavily oriented toward military and related assistance, a hangover from an era of politics that has be- come increasingly obsolete with the progress of detente, the emergence of a multipolar world and the supposed windup of the Indo- china war. Much of the $1.31 billion re- quested by the President for military assist- ance Is of doubtful utility either for the United States or for its proposed recipients. Ignoring the President's proposal, the For- eign Relations Committee has approved a Fulbright-drafted military authorization bill which would drastically reduce arms aid next year and would eliminate all military grant assistance over the next four years. Equally sweeping and notably constructive proposals on the economic side have been advanced by a 22-member majority of the House Foreign Affairs Committee. Setting aside for the moment the $600 million ear- marked for Southeast Asia, which raises spe- cial problems deserving close Congressional scrutiny, the House group has proposed that the remaining $1 billion in economic assist- ance be redirected to focus on the most acute problems of the poorest nations: rural development, food and nutrition, population growth and health, education arid human resources development. In addition, the Congressmen would es- tablish a new $1-billion Export Development Credit Fund for the lowest income countries which would have the dual purpose of aiding development and stimulating United States exports to nations accounting for one-third of the world's population. Although these and other new House pro- posals mark a sharp departure from past aid _psactices and the Administration's program, GRa006004700552thoughtf ul dab - oration on recommendations made by a Presidential task force three years ago and move in a direction Mr. Nixon himself advo- cat.nri 1mm his Inst. Stato of tin' Wnyiri mossnr+o ,Imie 20, 1973 Approved For Release 2001/08/30 : CIA-RDP75600380R000600170055-2 CONGRESSIONAL RECORD ? SENATE S 11581 If United States foreign aid is to serve United States interests and the cause of peace in the "radically different world" which was noted in that Presidential message, its purposes and structure should be radically revised along the imaginative lines that the two Congressional committees have begun to chart. By Mr. MONDALE: S. 2027. A bill to amend title _38 of the United States Code to make more equita- ble the procedures for determining eligibility for benefits under the law ad- ministered by the Veterans' Administra- tion, and for other purposes. Referred to the Committee on Veterans' Affairs. JUDICIAL REVIEW FOR VETERANS Mr. MONDALE. Mr. President, I am introducing today legislation which would allow veterans judicial review over their disputes with the Veterans' Administra- tion, and would raise to $100 the maxi- mum fee a veteran can pay an attorney for the representation of a veteran claim. An identical, bill is being introduced in the House of Representatives by Con- gressmen EDWARD I. Kocir, Democrat of New York and LES ASPIN, Democrat of Wisconsin. Under current law, all differences of opinion on veterans' claims are deter- mined administratively. No appeals out- side the Veterans' Administration are possible. .This legislation is necessary to extend the right of judicial review, which every- one else enjoys, to veterans. Under the present system, the Veterans' Adminis- tration is both a party to a dispute and the judge. It is difficult for the veteran, therefore, to obtain an impartial review of his claims. Mr. President, this bill also seeks to improve the existing situation with re- gard to representation by counsel Of the veteran. Present law provides that an, attorney may charge a veteran no mor than $10 for legal services. This proV - sion, purported to safeguard a veter in effect denied him the services of coin sel. This bill, therefore, would peri t a veteran to pay an attorney up to $10,01 for legal services rendered and, if theuat- icr was the subject of an appeal decided in favor of the veteran, the bill flurther provides that the Veterans' Administra- tion would be obliged to pay th6 attor- ney representing the veteran at reason- able fee for services rendered ds well as reimbursing the veteran the $100 first advanced by him. Admittedly, lawyers should be pre- vented from depriving a veteran of a sub- stantial part of his benefits- by exacting an exorbitant fee, but the $10 ceiling ef- fectively denies a veteran the assistance of counsel, and quite possibly, therefore, benefits. I was outraged to learn that VA regula- tions prevent an attorney for a veteran from contacting a Member of Congress for assistance in handling a veteran's claim. The penalty for seeking such con- gressional assistance is that the attorney can be investigated regarding his compe- tency to represent a claimant and he for- feits his right to a fee. My bill would also ' SEC. 4. (aY Chapter 71 of title 38, United ? " If the claimant a correct this violation of firsApprovedfarReleaises rights; it will open the way for a veteran to take his case to court. Mr. President, I believe that this bill, if enacted, will go a long way to redress the legitimate grievances of the young men who have served this country its Armed Forces. Mr. President, I ask unanimous con- sent that this bill be Printed at this poi in the RECORD. There being no objection, the bill as ordered to be printed in the R ORD, as follows: S. 2027 Be it enacted by the Senate an House of Rwresentatives of the Unite States of America in Congress assembled hat section 101(2) of title 38, United S ates Code, is amended to read as follows: "(2) The term 'veteran' eans a person who served in the active ilitary, naval, or - air service, and who via discharged or re- lensed therefrom other -Ian by a discharge imposed by a court-in tial." SEC. 2. (a) Subcha or I of chapter 51 of title 38, United Stat Code, is amended by inserting immediat after section soo5' the. following new sec on: "i 3006. Treatme of claims "(a) The Ad inistrator shall provide to any claimant f any benefit under law ad- ministered by he Veterans' Administrator a list of such ocumentary information and other evidei e which the claimant will likely need to st ort his claim. '(b) If any time after any claim is made for any b lent, any officer or employee of the -Veterai Administration obtains from any militar department or agency any military recor including health records, for the pur- poses of determining eligibility for such ben t, the Veterans' Administration shall im cdiately mail a copy of that record to the cl nant or his representative. (c) In the administration of the provi- s ns of this title relating to benefits, any laimant shall be presumed to be entitled to he benefit claimed. Such presumption must be rebutted by clear and convincing evidence? to the contrary." (b) The analysis of such subchapter I is amended by adding at the end thereof the following: "? 3006. Treatment of claims." SEC. 3. Section 3404 of title 38, United States Code, Is amended? (1) by amending subsection (a) thereof to read as follows: "(a) The Administrator shall recognize any individual admitted to practice law before the highest court in any State or the District of Columbia to act as an agent or attorney in the preparation, presentation, or prosecution of any claim under laws administered by the Veterans' Administration." (2) by striking out "section" in subsection (b) thereof and inserting in, lieu thereof "chapter"; and (3) by amending subsection (c) thereof to read as follows: "(c) The Administrator shall determine and pay reasonable,fees to agents or attor- neys recognized under this chapter in allow- ed claims for monetary benefits under laws administered by the Veterans' Administra- tion. Such reasonable fees shall not exceed $100 with respect to any one claim except that in any case in which a claimant for monetary benefits prevails upon an appeal to the Board of Veterans' Appeals or upon review pursuant to section 4010 of this title; the Administrator shall pay all reasonable fees." (1) by amending the last sentence of sec- tion 4004(a) by striking out the period at the end thereof and inserting in lieu thereof the following: "; but any such decision is subj to judicial review as provided for in sec 4010 of this title."; by amending section 4004(h) by strik- ig out "When" and inserting the following: "Subject to an appeal under section 4010 of this title, when"; (3) by striking out paragraphs (3), (4) , and (5) of section 4005(d) and inserting the fol- lowing: "(3) Copies of the 'statement of the case' "prescribed in paragraph (1) of this subsec- tion will be submitted to the Board of Vet- erans' Appeals, to the claimant, and to his representative, if there is one. Submission of the statement of the case by an employee of the Veterans' Administration to the Board of Veterans' Appeals shall initiate review by the Board of Veterans' Appeals. The claimant will be afforded a period of 60 days from the date the statement of the case is mailed to provide to the Board of Veterans' Appeals such supplemental information with respect to his case as he deems appropriate, includ- ing specific allegations of error of fact or law. Such 60-day period may be extended for a reasonable period on request for good cause shown. "(4) After the 60-day period, or longer pe- riod if such 60-day period is extended, has expired, and regardless whether or not sup- plemental information ? has been submitted to the Board of Veterans' Appeals by the claimant, the Board of Veterans'. Appeals shall review the case and will base its deci- sion on the entire record."; (4) by amending section 4005A (b) to read as follows: '(b) Upon the filing of a notice of dis- agreement, the Board of Veterans' Appeals and all parties in interest will be furnished with a statement of the ease in the same manner as is prescribed in section 4005. Fur- nishing of the statement of the case- to the Board of Veterans' Appeals shall constitute notice of appeal- by the party in interest who filed notice of disagreement. The party in interest who filed a notice if disagreement will be allowed thirty days from the date of mailing of such statement of the case to provide to the Board of Veterans' Appeals such supplemental information as he deems appropriate. Extension of time may be granted for good cause shown but with con- sideration to the interests of the other parties involved. The substance of the supplemen- tal information will be communicated to the other party or parties in interest and a period of thirty days will be allowed for filing a brief or argument in answer thereto. Such notice shall be forwarded to the last known address of record of the parties concerned, and such action shall constitute sufficient evidence of notice?' (5) by adding at the end thereof the fol- lowing new section: ' "I 4010. Judicial review "(a) Any claimant who disagrees with the decision of the Board of Veterans' Appeals with respect to his appeal may at any time before the sixtieth day after the date on which the claimant has received notification In writing of uch decision file a petition with the United States court of appeals for the District of Columbia circuit or the cir- cuit wherein such claimant resides for a ju- dicial review of such decision. A copy of the petition shall be forthwith transmitted by the clerk of the Court to the Board. The Board thereupon shall file in the court the record of the proceedings on which the Board based its decision, as provided in section 2112 of title 28, les to the court 5eilience and 2 02430 : CIA-RDP75B0 flOtR00060047 II ? IIP Approved For Release 2001/08/30 : CIA-RDP75600380R000600170055-2 S 8318 CONGRESSIONAL RECORD - SENATE May 7, 1973 STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS - By Mr. SCOTT of Pennsylvania: 1 S. 1711. A bill to amend the Foreign Assistance Act of 1961, and for other purposes. Referred to the Committee on Foreign Relations. FOREIGN ASSISTANCE ACT 05 1973 Mr. SCOTT of Pennsylvania. Mr. President, I submit today, for appropri- ate reference, the foreign assistance bill of 1973, to amend the Foreign Assistance Act of 1961 and for other purposes, and ask unanimous consent that it be printed in the RECORD. Mr. President, I also ask unanimous consent that a section-by- section analysis of the bill be printed in the REconn. There being no objection, the bill and analysis were ordered to be printed in the RECORD, as follows: S. 1711 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Foreign Assistance Act of 1973". DEVELOPMENT LOAN FUND SEC, 2, Title I of chapter 2 of part I of the Foreign Assistance Act of 1961, relating to the Development Loan Fund, is amended as follows: (a) In section 202(a), relating to. author- ization: (1) immediately after "fiscal year 1972," strike out "and"; (2) immediately after "final year 1973," insert "$201,400,000 for the fiscal year 1971, and $201,400,000 for the fiscal year 1975"; (3) immediately after "June 30, 1972," strike out "and"; and (4) immediately after "June 30, 1973," insert "June 30, 1974 and June -30, 1975,". (b) In section 203, relating to fiscal pro- viaions, strike out "for the fiscal year 1970, for fiscal year 1971, for the fiscal year 1972, and for the fiscal year 1973" and insert in lieu thereof "for the fiscal year 1974 and for the fiscal year 1975"; TECHNICAL COOPERATION AND -DEVELOPMENT GRANTS SEC. 3. Title II of chapter 2 of part I of the Foreign Assistance Act of 1961, relating to technical cooperation and development gran Is, is amended as follows: (a) In section 211(5), relating to general authority, in the last sentence immediately after the word "assistance", insert the word "directly". (b) In section 212, relating to authoriza- tion, strike out "$175,000,000 for the fiscal year 1972 and $175,000,000 for the fiscal year 1973" and insert in lieu thereof "$165,- 090,000 for the fiscal year 1974 and $165,600,- 000 for the fiscal year :1975". (c) In section 214, relating to authoriza- tion for American schools and hospitals abroad: (1) subsection (c) is amended to read as follows: "(c) To carry out the purposes of this sec- tion there is authorized to be appropriated to the President for the fiscal year 1974 $10,- 000,000, and for the fiscal year 1975 $10,- 000,000, which amounts are authorized to remain available until expended."; and (2) subsection (d) is repealed. HOUSING GUARANTIES SEC. 4. Title III of chapter 2 of part I of the Foreign Assistance Act of 1961, relating to housing guaranties, is amended as follows: (b) In section 222(c), relating to Latin American housing guarantees, strike out "$550,000,000" and insert in lieu thereof "$591,900,000". (c) In section 223(1) relating to general provisions, strike out "June 30, 1974" and insert in lieu thereof "June 30, 1976". OVERSEAS PRIVATE INVESTMENT CORPORATION SEc. 5, Title IV of chapter 2 of part I of the Foreign Assistance Act of 1961, relating to the Overseas Private Investment Corporation, is -amended as follows: .(a) In section 231(d), relating to insur- ance operations, immediately after the word "risks" insert the words "with other insur- ers, public or private, and seek to assure that with respect to insurance issued after enact- ment of the Foreign Assistance Act of 1973 all costs of the insurance program will, over the long term, be borne by the private users of the services". (b) In section 231(i), relating to the pro- tection of the economic interests of the United States, immediately after the words "balance-of-payments" insert the words "and employment". (c) In section 234(c), relating to direct in- vestment, strike out "(1) accept as evidence of indebtedness debt securities convertible to stock, but such debt securities shall not be converted to stock while held by the Corpora- tion" and insert in lieu thereof "(1) in its financing programs, acquire debt securities convertible to stock or rights to acquire stock, but such debt securities or rights shall not be converted to stock while held by the Corporation". (d) In section 235(a) (4), relating to issu- ing authority, strike out "June 30,1974" and insert in lieu thereof "June 30, 1970". a (e) In section 239(d), relating to general provisions and powers, immediately after the phrase "in the conduct of its business" insert the words "including, notwithstand- ing any provision of law, contracts of coin- surance and reinsurance with insurance companies, financial institutions, or others, or groups thereof, employing the same, where appropriate as its agent in the issuance and servicing of Insurance, coinsurance and rein- surance and the adjustment of claims aris- ing thereunder, and pooling arrangements and similar agreements with other national or multinational insurance or financing agencies or groups thereof". (f) In section 240(h), relating to agricul- tural credit and self-help community de- velopmentprojects, strike out "June 30, 1973" and insert in lieu thereof "June 30, 1975". (g) In section 210A(b), relating to re- ports to the Congress, strike out "March 1, 1974" and inSert in lieu thereof "February 1, 1975". ALLIANCE FOR PROGRESS SEC. 6, Section 252(a) of title VI of chap- ter 2 of part I of the Foreign Assistance Act of 1961, relating to authorization, is amended as follows: (a) Strike out "for the fiscal year 1972, $295,000,000, and for the fiscal year 1973, $295,000,000" and insert in lieu thereof "for the fiscal year 1974, $236,100,000 and for the fiscal year 1975, $236,100,000". (b) Strike out "$88,500,000 for each such fiscal year" and insert in lieu thereof $86,100,000 for each such fiscal year". PROGRAMS RELATING TO POPULATION GROWTII Sec. 7. Section 292 of title X of chapter 2 of part I of the Foreign Assistance Act of 1961, relating to authorization, is amended by striking out "1972 and 1973" and in- serting in lieu thereof "1974 and 1975". INTERNATIONAL ORGANIZATIONS AND PROGRAMS SEC. 8, Section 302 of chapter 3 of part I of the Foreign Assistance Act of 1961, relat- fiscal year 1973, $138,000,000" and insert in lieu thereof, "for the fiscal year 1974, $124,800,000 and for the n seal year 1975, such sums as may be necessary". (b) In subsection (b) (2), strike out "for use in the fiscal year 1972, a1.5,000,000, and for use in the fiscal year 1973, $15,000,000" .and insert in lieu thereof "for uae in the fiscal year 1974, $15,000,000, and for use in the fiscal year 1975, $15,000,000". CONTINGENCY FUND SEC. 9. Section 45-1(a) of chapter 5 of part I of the Foreign Assistance Act of 1961, relat- ing to the contingency fund, is amended as follows: (a) Strike out "for the fiscal year 1972 not to exceed $30,000,000, ani for the fiscal year 1973 not to exceed $30,000,000" and insert in lieu thereof "for the fiscal year 1971 not to exceed $30,000,000, and for the fiscal year 1975 not to exceed $30,000,000". (b) Strike out all that follows immedi- ately after the colon through the end of the subsection and insert in lieu thereof the following: "Provided, That, in. addition to the amounts authorized to be appropriated by this subsec- tion, there is authorized to be appropriated such additional amounts, as may he required from time to time to provide relief, rehabili- tation, and related assistance in the case of extraordinary disaster situations. Amounts appropriated under this section are author- ized to remain available until expended.". INTERNATIONAL NARCOTICS CONTROL SEC. 10. Section 4132 of chapter 8 of part I of the Foreign. Assistance Act of 1901, relat- ing to authorization, is amended by striking out "1973" and all that follows and insert- ing in lieu thereof "1974, and for the fiscal year 1975 such sums as may be necessary, which amounts are authorized to remain. available until expended.". MILITARY ASSISTANCE SEC, 11. Chapter 2 of part II of the For- eign Assistance Act of 1961, relating to mili- tary assistance, is amended as follows: (a) In section 504(a), relating to author- ization, strike out "$500,000,000 for the fiscal :year 1972" and insert in lieu thereof "$652,- 000,000 for the fiscal year 1971". (b) In section 500(a), relating to special authority, strike out the words "the Sac-al year 1972" wherever they appear and insert in lieu thereof "any fiscal year". (c) Section 514 is hereby repealed. SECURITY SUPPORTING ASSISTANCE Sac. 12. Section 532 of chapter 1 of part II of the Foreign Assistance Act of 1961, relat- ing to authorization, is ammded by striking out "for the fiscal year 1972 not to exceed $618,000,000, of which not less than $50,000,- 000, shall be available solely for Israel" and inserting in lieu thereof "for the fiscal year 1974 not to exceed $100,000,000". INTERNATIONAL MILITARY EDUCATION AND TRAINING SEC. 13. (a) Part II of URI Foreign Assist- ance Act of 1961 is amended by adding at the end thereof the folldwing DCW chapter:. "Chapter 5--INTERNATION AL Mil ITArtY - EDUCATION AND TRAINING "Sac. 511. STATEMENT OP PURPOSE.-The purpose of this chapter is to- establish an international military education and train- ing program which will: (1) improve the ability of friendly foreign countries, through effective military educa- tion and training programs relating particu- larly to United States military methods, procedures, and techniques, to utilize their own resources and equipment and systems of United States origin with maximum effcc- (a) In section 221, relating to worldwide Ing to authorization, is amended as follows: tIveness _for Vile magrice of their de- housing guarantees, strilacreatr. y 'prnelve1120-riefitne)i cm. RD PIM BO 0380 -66:110110 - n.41 security, there- and insert in lieu thereerlil fi ca year 9 2, $138,000,000 and for the by contributing to enhanced professional